SPXplus10

Wachovia CEO's Insider Buying Is Another Indication of a Bottom

the author is misleading us on "timing" the entry by presenting a logical fallacy: his premise and conclusion can't be both true. If it is the case that there will be a lower buying opportunity "in a few days" once the "short covering diminishes" and the longs lock in their profits, then as a short, it makes sense NOT to cover right now, but to wait for those "magical few days" and cover (if one is inclined) when the longs are profit-taking. But the longs are, by definition, not "profit-taking" until the short covering diminishes... Either the short-covering is diminishing now (at this price, since the shorts who haven't yet covered will wait for "the few days", or the short covering will continue unabated, in which case, now is as good a time to buy as any.

Shorts are not required to cover today or tomorrow or ever (subject to available margin)(the SEC regulation enforcement may inhibit new shorts, but for existing shorts I don't think there is any new urgency).

If the shorts are agreeing with this recommendation, the "later" buying opportunity does not occur.

As for the predictive value of insider buying, consider the "wisdom" of all the ex-CEOs on wall street. Did Jimmy Cayne have knowledge "better than anyone"? For real evidence, it might be interesting to see how many "insiders" were selling Bear stock the week before the demise, and how many were buyers on that Monday ($2 offer). My guess is that those that weren't locked out - and this article fails to acknowledge that any insider who actually does have "inside" knowledge is prohibited from buying shares in the company during the "hands off" period - were no better at predicting the future price of Bear than the average investor.