| In today's world, the financial rewards for success in the stock market are so huge - and the competition for them is so intense - that an investor needs an edge. Not just a perceived edge, but an actual one. And the best edge, in my view, is to ride the coattails of knowledgeable insiders. Why? Because they have access to all sorts of information, like... - The direction of sales since the last quarterly report
- New products and services in development
- Any expansion plans
- Potential mergers and acquisitions
- Whether the company has gained or lost any key customers
- The status of outstanding litigation
- Whether the company will put itself up for sale
- Plans to take the company private
... And plenty of other good stuff that those of us on the outside looking in may not fully understand. That's why the Securities and Exchange Commission requires corporate insiders - officers, directors, and beneficial owners - to file a Form 4 within two business days of any purchase or sale, detailing the number of shares bought, on what date, and at what price. Making this information public at least levels the playing field. (You may not know why the insiders are buying. But at least you can see that they are.) If you want to increase your stock market returns, you need to know what the insiders are doing. Buying stocks that insiders are bailing out of or selling stocks that they are eagerly buying is a fundamental mistake. Even when corporate fundamentals are checkered or poor, if the insiders are buying heavily it is generally a sign that the problems are temporary and the stock is set to press higher. Indeed, plenty of academic studies have confirmed that stocks with heavy insider buying tend to outperform the broad market in the months that follow. Do you know which stocks the insiders are piling into right now? You should. Because those are the companies whose shares are most likely to perform best in the weeks and months ahead, no matter what the broad market does. But you don't always need a Form 4 to take action... A Casual Chat About 30 years ago - back when I was a money manager and research analyst - I was an avid basketball player. As soon as the closing bell rang at 4 p.m. on Tuesdays and Thursdays, you could count on me to be in my car and headed to the local gym for a full-court game with other (slightly over-the-hill) players. In our pickup games, the winning five stayed on the court while the losing five went to the bottom of the list... and to the bleachers for a breather. One afternoon - as I was (ahem) sitting in the bleachers - I met a guy who mentioned that he was a regional manager at Costco Wholesale (Nasdaq: COST). "Yeah," I said, "how's business?" "Too good," he laughed. Too good? "You wouldn't believe how fast we're growing," he said. "We can barely keep up with demand. I've been with the company seven years now and - let me tell you - it's the craziest thing I've ever seen." That was the end of our conversation. But it was all I needed to hear. When the market opened at 9:30 the next morning, I bought Costco at market. I don't own the stock anymore. Over the years, I gifted all my shares to my kids as part of my estate plan. But I made sure they held on to them. And today they are worth roughly 100 times what I paid for them. All thanks to a less than three-minute conversation three decades ago. It taught me an extremely valuable lesson... When the people inside a business signal you that things are going well, act on that information. If you want to hear more about how this casual chat during a basketball game ended up changing my family's future, go here. Good investing, Alex | 
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