THE FINANCE GHOST: Why you should watch what the insiders are doing

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There’s an old saying in the market that directors may sell for many reasons, but they only buy for one

The concept of “inside information” is always contentious in public markets. Let’s be clear: it is illegal to trade based on price-sensitive, nonpublic information. A fair market is critical for the overall integrity of the JSE, as nobody wants to play a game where the rules aren’t applied equally to all the players.

It is difficult to prove an insider trading case, particularly as sudden moves in the share price tend to kick momentum traders into action. It can sometimes look as though many people profited from a big move before the release of news, even though almost everyone was just following the price action. We can reasonably speculate that there is a decent helping of undetected insider trading on every market in the world.

 

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