Dr. H. Nejat Seyhun, contributing writer to The BusinessThinker magazine, is the Jerome B. & Eilene M. York Professor of Business Administration and professor of finance, Ross School of Business, University of Michigan. He is an internationally recognized authority on financial issues and Derivatives.
As we enter a New Year, it is a good idea to review our stock selections and risk exposures. It is well known that legal insider trading by top level corporate executives in their own firms can help provide useful investment signals (Seyhun 2000, Investment Intelligence from Insider Trading, MIT Press.) Sustained insider buying in their own firms indicates a bullish signal while sustained insider selling indicates a bearish signal. Insider trading patterns provide useful signals not only for individual stocks, but also for industry sectors as well as the aggregate stock market.
The historical average value of the insider buying index is around 34. Above this level, I consider insider activity to be bullish. Below this level, I consider insider activity to be bearish. Insider trading patterns over the past six months indicate that insiders have regarded the European sovereign debt crisis and its potential impact on the U.S. market to be temporary. As the stock prices took a dive during July and August of 2011, insiders have regarded the depressed levels of stock prices as a good buying opportunity. Consequently, at a reading of 56 in August 2011, insider sentiment reached its highest level in over two years. To find the previous high, one has to go back to March of 2009 when stock prices had reached a trough and insider buying rocketed to twice the usual levels. Index levels of 60 and above on insider sentiment around March of 2009 appeared to be extremely timely as Dow Jones Industrial Index has increased more than 80% since then.
Continue reading Corporate Insiders are Turning Neutral on the U.S. Stock Market
Dr. John Psarouthakis, Founder and former CEO, JPIndusries,Inc., a Fortune 500 industrial corporation. Publisher of www.BusinessThinker.com
J.P. Industries. Inc. (JPI) made its first acquisition – a metal stamping firm with annual sales of $3 million. Within the next ten years JPI joined the Fortune 500 Industrial Corporations. It was merged into T & N, plc of the UK in its 11th year.
Writing about JPI, I would like to start with the two factors I consider central to the success of JPI: synergy and homogeneity.
You are probably saying to yourselves that synergy was a concept of the 1960’s which was not notably successfully employed by the conglomerates which coined it, and that homogeneity reminds you more of processing milk than of conducting business. However, I believe that understood and applied correctly, the concepts expressed by these words have clear practical meanings and direct application to business growth.
Continue reading Building a Fortune 500 Manufacturing Corporation from Scratch (Synergy and Homogeneity for Growth in Manufacturing)
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Dr. David Hummels
Professor of Economics at Purdue University
Postdoctoral Research Fellow at Yale University’s Department of Economics
Dr.Jakob R. Munch
Asian Dynamics Initiative Professor of International Economics in the Department of Economics, University of Copenhagen
Associate Professor of Economics, and Director of Graduate Studies, at Economics Department, Purdue University
With stagnating wages and lingering unemployment, income inequality is back in the headlines. Is globalisation to blame for this inequality? Is more education a solution? This column argues that focusing on university education misses important effects. It presents evidence that wage effects vary markedly among those with degrees depending on their specific skill sets, and that globalisation can often benefit workers
Fuelled by concerns over rising income inequality, Occupy Wall Street has grown into a global movement in slightly over 2 months, with protests i over 900 cities worldwide. Protestors have been criticised for lacking a specific set of policy demands, but in this the protestors are hardly alone.
Continue reading Globalisation and higher education: Different degrees of success. (Offshoring, inequality, and the value of college degrees)