Inside Scoop : Understanding Stock Insiders

Who is behind alternative stock markets? Spoiler alert: not all the well-known investors are on TV. insider beta Welcome to the world of the stock insiders, those who have a front row seat at all the action. Let's peel back the curtain and see what makes these individuals so intriguing.

First, let's clarify who these insiders are. We're talking about company executives, board members, and major shareholders. This is a group of people who have non-public knowledge that could make or break the stock performance. Imagine having access to a crystal-ball that can tell whether or not a company will have a stellar next quarter. For them, it is similar.

Now, let me share a quick anecdote. An old friend of mine used to work at a firm in the tech industry where, just prior to launching a new revolutionary product, the CEO acquired a huge amount of stock. The stock rose dramatically overnight! Coincidence? Do you think it's a coincidence? Insiders often have their fingers on the pulse of their companies in ways outsiders can only dream of.

It's not as evil as it may sound. In order to avoid unfair advantages, insiders must follow strict rules on when and how they can sell or buy shares. Consider it like poker except that everyone is required to display their cards in certain intervals.

What is the point of being interested in what insiders are doing? 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. If the stock is selling well, perhaps it's time you rethink how to invest.

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

The next time that you consider which stocks you should buy or sell to make, you might want to take a look at the actions of those who are in the know. You may just find out what you need!