Back in October last year, as the FTSE 100 collapsed by 20% in a week, UK company directors stepped in and bought shares, with buys outnumbering sells by 5:1*.

In the months since then, buying has fallen away, to 2.75:1 in November*, slumping to 1.3:1 in December* and in the latest month, January, buys outnumbered sells by only 1.15:1*.

The 5:1 ratio seen in October matches an exact same ratio for December 2002, only months before the market rallied strongly, and is similar in scale to August 2002’s 4:1 ratio.

What to do? Look for buying opportunities. You are highly likely to see directors step in strongly as buyers if/when we see another significant setback in the market.

For all our earlier market related thoughts on followthedirectors see Market Musings.

*source: Digitallook.com