Recap of August 17: Good Insider Trading?
Bob Sellers sat in for Neil Cavuto and was joined by former New York Senator Al D'Amato; Michelle Girard, Senior Vice President at Prudential Financial; Gregg Hymowitz, Founder of Entrust Capital; and Jim Rogers, President of JimRogers.com.
More For Your Money: Good Insider Trading?
Everyday some executive at some company is legally buying or selling some of their own company's shares. That information is easily accessible and according to Vickers Insider Report, if you buy and sell stocks based on what insiders are doing, your returns would be more than twice that of the Dow. Is it that easy?
Jim says tracking insider action is one of several indicators for action on a stock. He wouldn't buy a stock if insiders were consistently selling and vice versa.
Al says when someone on the inside is buying with their own money, that's a very good sign. He offers his own purchase of Computer Associates (CA) as an example. He is on the board and says he believes in the company.
Gregg thinks insider buying is a very interesting sign and a better indicator of the health of a company than selling since it is difficult to know the motivation for insiders selling. However, massive insider selling by several executives is a very strong indication that you should get out of the stock.
Michelle thinks that the recent pickup in insider buying is a very positive sign for the market.
One company that is seeing a lot of insider buying: JP Morgan (JPM) the panel agrees this is a good sign.
One company that is seeing a lot of insider selling: Williams-Sonoma (WSM) the panel views this selling as a negative sign.
Two places you can go to get information on insider buying and selling: www.quote.yahoo.com and www.argusgroup.com
A New Bull Run?
This past week marked the 20th anniversary when the longest and biggest bull run began. From August 1982 to January 2000 the Dow ran up 1400%. Back then we had a big cut in capital gains taxes and 401(k)'s were introduced to help it along. How can we start a new bull run of that magnitude?
Al says we need some "bad guys going to jail, more indictments," so people know that corporate crime doesn't pay and investor confidence is restored. One stock he does like now is Verizon (VZ) because he says it's a solid company that offers a good dividend and the stock has been brought down by all the bad news in the telecom industry.
Jim doesn't agree that we need more people to go to jail. He says the market's been "clobbered" and it's going to go up for awhile whether we put more people in jail or not. He recommends two exchange-traded funds: one that tracks the S&P 500 (SPY) and one that tracks the Russell Mid-Cap (IWR).
Gregg says we are in a very different environment than the one that launched the last bull market. He says 1962 is a better parallel for today and that earnings have to start growing to get a bull market going now. One favorite stock right now that he says is taking market share away from competitors and growing its business is Wendy's (WEN).
Michelle says, "we need less government and sound monetary policy" to get a bull market going right now. She sees higher interest rates down the road. And so she says be careful when you are buying bonds stick to short to intermediate term bonds (2 to 5 years) or buy inflation protected treasuries or "TIPS" at www.treasurydirect.gov or 1-800-722-2678
Head to Head: Don't Bail out Airlines?
Bail out the airlines? Bob says absolutely not! But Susan Estrich, a Law Professor at USC says if we don't our economy loses and the terrorists will win!
FOX on the Spot
Gregg predicts President Bush will shake-up his economic team!
Jim thinks "Sir" Alan Greenspan falls from grace as world economy falters!
Al says stocks rebound when corporate crooks do jail time!
Michelle thinks bond yields have bottomed out!
Bob says baseball is in the air and their will be no strike, so play ball!