Tue 18 Jul 2006
Beat the Stock Market: Buy when the CEOs are granted stock options
Posted by Jon under UncategorizedBeat the market by following the CEO’s stock options
According to research done by Bloomberg you can beat the stock market on average by 5.2 % yearly if you buy the stock the exact moment the CEO announce they have been awarded stock options. Holding the stock for 3 months beats the market by 5.2% per year. Holding the stock for 180 days beats the market by 4.2% per year.
Bloomberg studied 4.290 cases of option grants in 1500 companies, including Yahoo! Inc. and Advanced Micro Devices Inc.
Also there have been a practice of back dating stock options to periods were the stock price were low, but back dating practice has been eliminated from the study.
The statistics:
Quote: “According to Stephen O’Byrne, a mathematician and president of Larchmont, New York-based Shareholder Value Advisors Inc., the probability that this finding occurred by chance is less than one in a trillion.”