To avoid failure
I am a stock investor.
I own stocks in a variety of industries, including software, hardware, food, automotive, banking, and medical.
And when I buy stocks, there is one thing I always check.
That is, whether there have been any recent purchases of shares by insiders.
Insiders are shareholders who own 10% or more of a company’s stock.
This includes C-suite Executives and large hedge funds.
These insiders are required to inform the public of their trades by filing a Form 4 within two business days of the trade.
Outside of earnings announcement season, most insiders are allowed to buy and sell stocks freely.
A new purchase by a company insider means that he or she expects the stock to go up.
When there is uncertainty in the market, or when stock prices are near all-time highs, insider buying can be an encouraging signal to investors.
So I try to judge that if an insider is buying stock, it is safe to buy that company’s stock.