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Posted By Barry Ritholtz On December 18, 2004 @ 11:32 am In Markets | Comments Disabled
Alan Abelson points to an interesting chart from Trevor Greetham, Merrill Lynch’s chief of global asset allocation. It shows the historical correlation going back 15 years or so between insider sells and the markets subsequent performance:
click for larger graphic
graphic courtesy of Barron’s 
". . . His calls have been pretty much on the money for at least three years running, so if he’s uneasy, it’s not a bad time to take some money off the table. He has some interesting company: directors of public companies have turned pronouncedly bearish. Take a gander at that chart nearby, what it depicts is the ratio of directors buying their companies’ stock to directors selling their companies’ stock going back to 1980. It also tracks the S&P 500 index over that stretch.
As you can see, at last count, more than six directors were selling for every one that was buying, a ratio, Trevor informs us, exceeded only once before in 30 years. This is not, he comments, a contrarian indicator. Directors, in fact, have had a pretty good record in timing the highs and lows in the market."
I find the chart intriguing, and its yet another piece of the puzzle supporting an eventual denouement (though Greetham’s top is sooner versus my later).
But a few caveats are definitely in order:
All that said, its an issue worth watching.
Thin Air 
Up And Down Wall Street
Barron’s Monday, December 20, 2004
Article printed from The Big Picture: http://www.ritholtz.com/blog
URL to article: http://www.ritholtz.com/blog/2004/12/bad-company/
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 Image: http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/bupdown_wallst_12172004_1.gif
 Barron’s: http://online.barrons.com/article/SB110332968171803792.html
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