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There's an old investing adage that tells us that there are many, many reasons for CEOs and other corporate insiders to sell their shares.
But there's really only one reason to buy: They see a chance to make money.
I was thinking about this bit of stock-market wisdom just the other day after noting that a tech-sector CEO who I know made a move with his own company's shares.
I'm going to tell you who the CEO was in just a minute – and I'll also share details of the move that he made. Because once I disclose whether he bought or sold, you're going to want to make the very same move…
A Reason to Deal
When you read about the lives of Silicon Valley CEOs, you wouldn't think that they have to deal with any of the same challenges that face Main Street Americans.
But that's not necessarily true.
You see, even Silicon Valley CEOs sometimes face personal financial challenges.
Those challenges might consist of buying a new home or putting a child through college. Or they might involve a hefty tax bill, an expensive divorce, or even the need to do some estate planning.
Those might be different from the challenges that you and I face, but they're challenges nonetheless.
And one straightforward way to solve those issues is to sell some of their own company's stock.
And that brings me back to the stock-market adage that I used to begin today's discussion with you.
The fact of the matter is that there are any number of valid reasons why a Silicon Valley CEO might want to sell some of his or her company holdings.
And a stock sale doesn't necessarily mean that they see bad news ahead.
But when you get right down do it, there's really only one good reason for insiders to be buying shares of their company – they believe better times are ahead and that the stock is destined to rally.
In fact, spotting insider buying is a good way to consistently beat the market. Basically, this is about as bullish an indicator of a company's future as you can find.
I believe that's particularly true when you come across an insider who's buying shares in his or her own company at a time when the stock has been beaten down, or when their particular sector is deeply out of favor.
And insider buying on a beaten-down stock in an out-of-favor sector is just what we have.
For me, that's cause for excitement – especially since the CEO in question is a highly regarded executive who I've known and dealt with for several years.
And the story gets even better: You see, research shows that insider buying is a great leading indicator of a surging stock price.
Let me show you how insider buying can lead us to some of the best stocks to buy now…
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.