Last month I received an email from a subscriber who had been reading my weekly articles about insider transactions since September 2017 and he told me a very interesting story about his experience following company insiders as they (legally) bought stock in their own companies. In the ensuing weeks, through a series of email exchanges and two phone calls I was able to learn more about Rick and feel privileged to share his story through this article.
I have reproduced the first email he sent me almost verbatim below with minor modifications to improve readability.
I have used the insider approach probably longer than anyone that is still alive today! It started in 1974 when I read a book by Perry Wysong who had worked at Eli Lilly. Back then I would receive reports directly from the SEC of insider buying. Keep in mind, back then the reports were 6 months old as the rules were different! It still worked!! I left a family owned business to become a broker at a small firm called Thomson McKinnon, then went to Dean Witter, then found a home at EF Hutton for 7 years and did extremely well.
In the beginning the high producing brokers made fun of me and pointed out where the insiders were wrong. A man called Doug Krueger who sat next to me began seeing the results, jumped on board and we had a ball! I made one gigantic mistake, I HAD WITNESSED 16 STOCKS IN A ROW THAT HAD WORKED AND WAS NOT DIVERSIFIED. There was a company called Southmark with huge insider buying at about $5 a share. I sold everything I had and margined to the hilt. The stock went to $12 and I was planning on taking at least half my profits and diversifying. I was in Hawaii thinking how I would become a muti-millionaire at the ripe old age of 27!
A few weeks later Southmark declared bankruptcy and I lost a wife not because of this but because of my alcoholism. You see I am a Christian and in the very beginning I gave God the credit, then later God and me, then me alone!!