Tags: Hulbert | insider | selling | stocks

Hulbert: Corporate Insider Selling Signals Danger in Stocks

By    |   Monday, 17 March 2014 09:19 AM

Corporate insiders are selling their companies' shares at the fastest pace since at least since 1990, according to one measure, sending up a caution flag for stocks, says Mark Hulbert, editor of Hulbert Financial Digest.

Nejat Seyhun, a finance professor at the University of Michigan, determined that in recent weeks corporate officers and directors have sold an average of six of their companies' shares for every one that they bought, Hulbert writes in The Wall Street Journal.

That's more than twice the average ratio since 1990, when Seyhun began tracking the numbers.

Editor’s Note:
5 Shocking Reasons the Dow Will Hit 60,000

"That isn't good news for the stock market, since these insiders — corporate officers and directors — know more about their companies' prospects than the rest of us," Hulbert says.

"You may want to take their pessimism as a signal to ditch some of your stocks or shift into industries in which insiders aren't heavily selling, such as energy, financials and basic industrials."

The industries in which Seyhun reports heavy selling include capital goods, technology, consumer durable goods (such as automobiles and appliances) and consumer non-durable goods (such as food, beverages, clothing and tobacco).

Some market participants are losing their bullish sentiment for reasons having little to do with insider activity.

"A lot of the good news and data already seems to be priced in," Kevin Caron, a market strategist at Stifel Nicolaus, tells Bloomberg.

"Whenever there's uncertainty or concern around geopolitics, the first reaction will be to sell and weigh the evidence later. That's what we're seeing now in response to China and continued tension in the Ukraine."

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

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Corporate insiders are selling their companies' shares at the fastest pace since at least since 1990, according to one measure, sending up a caution flag for stocks, says Mark Hulbert, editor of Hulbert Financial Digest.
Hulbert,insider,selling,stocks
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2014-19-17
Monday, 17 March 2014 09:19 AM
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