lorddarley

Insiders Are Selling into the Rally

I appreciate this artcle. As the author knows, insider trading is very inexact. Look at Bernie Friedbaum, the former CFO of GGP, a massive buyer until he was destroyed on margin. Ditto for Aubrey McClendon at CHK, who at least still has his job but lost all his stock, almost $2 billion worth.

There are so many reasons why an executive can sell that it's just not a reliable indicator in my view. These days, a lot of the sales are formula driven so that there will not be penalties (or innuendo) attributable to insider trading prohibitions.

In addition, we undoubtedly have higher tax rates kicking in next year, and probabbly higher interest rates which will depress all equities. These "non-qualified" options generate ordinary income for tax purposes, so it's sensible to sell in 2009.

LordD