Listen To Insiders Carefully With Investment Advice

As I’ve written about previously, I would encourage readers to find insiders that share a similar investing philosophy to oneself. They should watch the transactions made by such insiders to learn more about which areas or sectors of the stock market to focus on, as well as which individual stocks one should pay attention to.

In this article, I’m going to discuss another important idea: follow the advice of such insiders, particularly if it makes logical sense.

Warren Buffett is one of the insiders I follow closely, and Buffett has been a staunch supporter of exchange traded funds (ETFs) for the average passive investor for years. ETFs allow for high levels of diversification at very low fees, and essentially eliminate the need for expensive money managers, a great toll for investors with long-term investing time horizons.

Insiders such as Warren Buffett can be great sources of insight and knowledge for investors, and I’d encourage all investors to find such an insider to follow accordingly.

As always, please remember to consult with a certified financial advisor into your own homework before making investing decisions. Insider buying and selling activity is not necessarily indicative of the future performance of a given company’s stock price, and insiders regularly buy or sell positions in companies they own or manage for reasons other than expectations of future stock price performance.

Analyzing insider transactions in a given stock is one tool of many to gain pertinent information to assist in investment decision making.