Inside Scoop: Stock Insiders - What do they know?

Do you know who controls the market in alternative data stocks? Spoiler alert: not all the well-known investors are on TV. https://insiderbeta.com/ Welcome to the world of the stock insiders, those who have a front row seat at all the action. See what these fascinating individuals are like by peeling back the curtain.

Who exactly are insiders in the first place? It is important to note that we are talking about the CEO, directors and largest shareholders. People with non-public access can have a huge impact on a stock’s performance. Imagine having a crystal ball that tells you whether a company's next quarter will be stellar or disastrous. That's kind of what it's like for them.

Now, let me share a quick anecdote. Unknown to me, a friend of mine worked at a company in which the CEO of that firm bought large amounts of stock before announcing their groundbreaking product. The stock price skyrocketed overnight! Coincidence? It's not a coincidence. Outsiders are often unable to imagine how insiders have the ability to feel their company's pulse.

Hold your horses, insider trading may not always be as bad as you think. To prevent unfair advantage, there are rules that govern how and when an insider can purchase or sell stock. Consider it like poker except that everyone is required to display their cards in certain intervals.

So why should you care about insider activity? What insiders are doing can give valuable insight into a company’s future. When several senior executives begin buying stock, this could be a sign that they are confident in the future. The opposite is true if the shares are flying off shelves. It might be time for you to change your strategy.

We'll add a bit of humor to this: Have you heard "Do as the Romans Do" when in Rome? In this case, "When investing, watch what insiders do." Although it isn't foolproof, at least you don't have to throw darts in a stock list!

So next time you're contemplating which stocks to buy or sell, take a peek at what those in-the-know are doing--it might just give you that extra edge you've been looking for!