What is Insider Trading?
Insider Trading refers to the act of buying and selling of a company’s stock by corporate insiders. The term includes both legal and illegal conduct. As investors, we are only concerned with the legal disclosures that are routinely made as a part of the compliance requirements. All references and usages of the words ‘insider trading’ herein below contained, are to the legitimate version. Click here and here to read what the SEBI (Securities & Exchanges Board of India) provisions say on insider trading.
How is Insider trading data different from other indicators?
Insider trading augments and strengthens other signals since insider trading contains an independent signal of enterprise value and is forward-looking. Insider Trading is distinct from all other stock market indicators for the following reasons:
- All other indicators or tools use the current stock price as a basis. As a result, changes in stock price can materially affect these indicators or tools. In contrast, insider-trading activity does not depend on the current stock price. Therefore using signals from insider-trading activity is likely to increase our chances of investing success.
Other stock market indicators provide only historical information. In contrast, insider trading is the only indicator that is based on expectations of the future. In that sense, insider trading is a forward-looking indicator. All others are backward looking.
What’s in it for me?
Can insider trading data be put to use for arriving at buy/sell decisions? Does insider trading data aid the investment process? The short answer is: Yes. Insider Sentiments as a paid value added service will demonstrate how insider trading disclosures can be put to profitable use, irrespective of market cycles (bull or bear). The following merits consideration:
- For transacting on the recommendations made using Insider Sentiments, investors are free to transact at any brokerage house that they desire. In case any of you wish to transact with us, we will only be too happy to offer our services. Click here to know how you can do that.
- For existing clients of Vimal & Sons; we will only be too happy to transact for you if you decide to subscribe to Insider Sentiments. The brokerages at the applicable rates will be levied separately.
- At Sentiments & Bubbles, we eat our cooking. Every investment idea that is published or suggested would be one in which I have personally invested. I firmly believe in putting my money where my mouth is.
If the information is freely available, why should I pay?
The reasons are as follows:
- All insider trades do not qualify as an investment. Corporate insiders are known to suffer from an ‘overconfidence bias.’ As a result, all corporate actions cannot be blindly followed. What about the state of the market, the economy, valuations, etc. Is all the data that is freely available also actionable? If not, what part of it is? In other words, there is too much information that is easily accessible. Insider Sentiments will splice and dice the data, and present only the best ideas.
- Sentiments & Bubbles as an investment advisory service is uniquely positioned to differentiate the signals from the noise. Why? As a Chartered Accountant and a member of the National Stock Exchange (NSE), I think I bring a much-needed (and entirely missing) perspective to investing in the stock market.
Why are you letting everybody in on this if it such a great idea?
I have been writing about investing in stocks for the last two years. All of what I have written will just be ‘empty advice’ if I cannot show investors a way out. In my opinion, capitalizing on the sentiments of the owners (insiders) of businesses is the best way of increasing the probability of achieving investment success.
How many recommendations can I expect in 12 months?
This is a tricky one. The volume of insider trades that are executed is vast. Not all of them qualify as investment grade. It is impossible to quantify the number of ideas that would be published. However, we would urge investors not to assess the efficacy of this service by the quantity alone. At Sentiments & Bubbles content and quality will always take precedence over quantity. In my opinion, it is necessary that investors act upon all the recommendations. In other words, they should not let any personal biases interfere with the ‘system’.
What is the time frame for Insider Sentiments?
This is the most important part. Corporate Insiders are early. At times, they are very early. Hence, these investment ideas take at least twelve months to see fruition. The average life of any insider trading action lasts for more than one year. Market sentiment and mood govern the short-term. Nobody has any control over that part. As a result, over the short-term and for periods of less than a year, the results may not meet investor expectations. Insider Sentiments is about investing for the long-term. That is where the real money is made. Hence, for those of you whose investment horizon is less than one year, Insider Sentiments would be of little use.
- Forecasting insider activity is impossible. Before any report is published, the insider activity will be vetted. In other words, purely any Insider Buy or Sell will not be presented as an investing idea. The stock in question will be filtered and assessed separately as well. However, every stock idea that will be presented will necessarily be backed by an insider trade.
How much will Insider Sentiments cost?
Insider Sentiments is priced at Rs. 18000 for an annual subscription. In case you desire to subscribe, there are two ways that you can do that. These are:
Transfer funds via NEFT or by depositing a cheque favoring Sentiments & Bubbles in either HDFC Bank or ICICI Bank. In cases where payments are made into either of these two bank accounts, access will be enabled on receipt of confirmation from the respective bank. The details are as follows:
To make payments via net-banking or credit card you may click on the Buy Now button at the bottom of this page. For Overseas subscribers, the PayPal payment option is enabled and will cost U.S.$ 250.
What is the Refund Policy and what are the disclaimers?
The following points merit consideration:
- This is an annual subscription. No monthly or quarterly payment options are available. Sentiments & Bubbles will refund all monies paid, after deducting a processing fee of twenty-five percent, up to thirty days from the date of payment. Refunds will not be processed after this thirty-day window.
- Insider Sentiments as a service or product is of use for investing solely in the Indian Stock Market.
- SEBI regulations prohibit the assurance or guarantees of returns on investment products. Investors need to understand that none of the above should be interpreted to mean that I am guaranteeing or assuring returns. Insider Sentiments will only increase the probability of achieving investing success.
- Subscribing to Insider Sentiments would be construed as an acceptance of the terms and conditions of the service.
- Any queries may be addressed to firstname.lastname@example.org or email@example.com.
- All Insider Sentiments reports will be hosted on our servers and an email alert will be sent as soon as they are available. Unauthorized distribution or sharing and copying whole or parts of the report will be frowned upon. Appropriate action would be initiated in all such cases.