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Director deals could be tipping point

Seventeen times more directors bought shares in their own companies than those selling in the last week of October, signalling a change in the downward cycle, says Close Investments.

Smaller companies team manager Deryck Noble-Nesbitt says the buy-to-sell ratio was 10:1 the previous week and is at a level seen only three times since 1986.

He says: “One interesting feature is the contrasting behaviour of company directors and private investors. Our experience over the past decade tells us that private investors tend to invest when equity markets are high and stop investing when equity markets are low.”

He says one reason for the discrepancy is that investors have less capital in tough times but he adds that fear plays a bigger factor in determining when they will buy.

Noble-Nesbitt says: “It is interesting to note that in the last week of October, 17 UK directors bought their own companies’ shares for every one that sold. We believe now is the time to start following the directors and stop following the herd.”


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Tsar performers

I believe that the Russian stockmarket is unbelievably cheap, especially outside the oil, energy and commodity sectors. The market overreacted to the Georgia crisis and has now priced in a worse scenario than the financial crisis of 1998.


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