Similarly, after an industry gets killed one year, look for it to rise the next year. Insider buying is predictive . Fifty years of academic studies show that when the last insider trade is a buy, the companies tend to perform better than the averages. And when the last insider trade is a sell, the companies tend to perform worse. Nejat Seyhun, a professor at the University of Michigan, has done the best work on this.
Research pays .
The linchpin for starting successful new products is research. Michael Murphy, in his growth-stock newsletter, emphasizes the importance of research to sales. Many years ago, we developed a measure that we consider better than research to sales. It's research to price. We recently learned that others have subsequently developed such a ratio independently, tested it and concluded that companies with high R-P ratios have consistently outperformed.