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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 one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.