Insider stock trading – First, over a full stock market cycle, it will improve your investment profits without the application of any thought whatever on your part.

As is well known, there are many investors who do not believe that the market will ever go through a full cycle again”that the direction of the market is in a permanently upward movement, except for temporary, minor dips. It might be worthwhile to point out”without seeming to be pessimistic ”that there are some good arguments against an indefinite continuation of bull markets. In the 12-year period from June, 1949, to June, 1961, the market”as measured by the Dow-Jones Industrial Average” rose over 300 percent, a compound rate of gain of about 13 percent annually. Assuming that there is some connection between the nation's economy and the stock market, this rate of gain in the market cannot be maintained indefinitely, because the economy ordinarily grows at a rate of three percent or so (this varies, but it never reaches 13 percent). Even granted that the market was too low in 1949 (which it most certainly was), that does not mean that a steady 13 percent rate of gain will not have put it too high at some point. If this perhaps gloomy suggestion turns out to be wrong, and the market does continue forever upward, then formulas will be useless, since they do assume that the stock market is quite cyclical.

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