This week I'm spending some time testing the theory from a recent paper on how insider buying and selling affects different bearish and bullish factors.
I'm finding that adding insider data to our stable of numbers-driven market strategies really boosts returns, and more importantly, it does so by avoiding potential problems.
While insider buying does magnify gains somewhat overall, where portfolio returns go into the stratosphere is using insider selling to cancel signals that would otherwise be a buy.
This helps us avoid the big mistakes and keeps the focus of the portfolio on those companies where insiders have been buying.
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