Is Insider Trading a Bad Indicator?

Not much is working in the current market.

Severe daily chop, recession concerns, banking concerns, interest rate concerns, war concerns… The list is never-ending.

One week the tech sector is on fire… the next week it’s utilities… and then it’s back to tech… and then the banks crash. It’s been one thing after another.

This is a GREAT environment for in-and-out traders like my partner Bryan Bottarelli, who has racked up a ton of winners this year.

But for investors who use tried-and-true strategies, it’s been a challenge.

However, the truth is…

Within that challenge lies a HUGE opportunity.

Let me explain by using one of my favorite strategies: cluster buying.

Cluster buying is when several company insiders (at least two officers and three total buyers) buy a significant amount of their company’s shares on the open market. I am talking millions of dollars’ worth of shares. This type of trading signifies that they have enormous confidence in the future of the company.

The thinking behind my cluster buying strategy is that insiders have intimate knowledge of what is happening at their company from day to day. They know about deals that are coming down the pike. They know what big things are in the offing.

Right now, following this strategy doesn’t seem to be working. Should we dump it and move on? My answer is a resounding NO!

When insiders buy, they are not allowed to sell for at least six months. Many don’t sell for years. They are not buying shares today based on the expectation that they will trade out of them in a week or a month. When the market was rocking, investors could make that bet, buying when insiders bought and selling on the pop that almost always followed.

Now we are back to the traditional form of insider investing. Insiders are buying because…

  1. They think the shares are cheap.
  2. They think the shares are going higher in the long term.

But the long term is not a day or a week later. It could be months later.

It’s not the insiders who need to adjust their expectations – it’s us, the outsiders!

So while insider trading may not be producing the quick pops that we are used to seeing, the thesis behind investing alongside insiders has not been disproven.

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If you want to follow us to the best insider opportunities, sign up for Insider Matrix now. Insider trading has been hugely successful over time, and insiders are getting ready to show their cards once again. Companies begin reporting earnings starting next week, and insiders will finally be able to start buying shares again.

Click here to unlock Insider Matrix now.

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