Targeting When the Top Dogs Buy
For longtime readers, it should come as no surprise that, in addition to reading everything I can get my hands on, I am a big fan of playing around with numbers and data in order to find things that work in the markets. Over the years I have had countless epiphanies that have been subject to my crude testing skills. Most of them did not work. Some did, and while there is no Holy Grail of investing, I have discovered what I like to call "pretty nice chalices." I've been searching around the databases maintained by fellow Real Money contributor Jon Moreland, of Insider Insights, and this has provided one such idea that appears to work very well, and is a tool for traders and investors alike.
The idea was simple, but the results were stunning. I tested the idea of buying stocks in the database that had large insider buying by the two top executives. When the CEO or CFO broke out their checkbook and bought shares in the open market, good things happened to the stock price. In 2011 we saw 33 qualifying trades -- and 25 of 33 were positive, with an average gain of 31% by year-end. In 2009, 16 of 19 trades were positive, with an average gain of 72%. The difficult years of 2009 and 2008 also saw very large average gains and a high percentage of profitable trades....465 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.
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