insider selling

If insiders are selling is it time to get out of the market?

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While business leaders are happy to tell you all the reasons why their stock is a buy, the actions of company insiders can tell a different story about a company’s investment prospects.

There are many legitimate reasons for corporate officers to buy or sell.  They could have received a large number of shares as part of their compensation  and want to sell shares to buy a new home or diversify their investments. But it’s also possible that they know something and want to sell off their shares before the market drops or their company’s stock takes a nosedive.

A recent article by CNN entitled “Insiders are selling stock like it’s 2007” points out that Corporate insiders have sold an average of $600 million of stock per day in August, according to TrimTabs Investment Research, which tracks stock market liquidity.

“It signals a lack of confidence,” said Winston Chua, an analyst at TrimTabs. “When insiders sell, it’s a sign they believe valuations are high and it’s a good time to be outside the market.”

In addition, The Facebook CEO has sold nearly 2.9 million shares of the tech company worth more than $526 million for all of 2019.

It is important to do your own research and make your own decisions about how and where to invest your hard-earned dollars. Stay diligent. If you want to find more insider selling stats checkout this link to Nasdaq.