American directors dump their stocks

Despite stock markets enjoying a great start to the year, directors in America are dumping stocks at a record rate. Should you be worried? Tim Bennett reports.

Stockmarkets around the world have had a great start to the year. But one key group of investors seems unconvinced: company directors in the US are dumping stocks at a record rate. These people should be in a position to understand the state of their companies better than anyone else, so it's hardly a resounding vote of confidence in the rally. Should you follow them and sell up?

Company directors (also known as insiders') at US firms are selling nine stocks for every one they buy, according to the most recent Vickers Weekly Insiders Report from Argus Research. Over 20 years, the average is a sell rate of around 3.4 to one. Given their privileged view of the economy and their own companies, that would seem like a worrying sign for anyone buying these same shares.

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Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.