“By and large, most Americans appear to be bullish on the economy and at least neutral on the stock market. Mutual fund sales are going well, and housing and consumer spending statistics show an economic recovery that is on track,” writes Floyd Norris in last Friday’s New York Times.

“But there is one interesting group that has turned more bearish than at any time in years: corporate insiders.”

” ‘There has been huge, huge insider selling,’ said Phil Roth, the veteran technical analyst at Miller Tabak, referring to legal sales by corporate officers and directors, not to illegal trading on inside information. He noted that over the last eight weeks, there had been 4.2 insider sales for every insider purchase reported. There are usually more open-market sellers than buyers, since insiders get a lot of their stock by exercising options, but this ratio is higher than it ever was in the 1990’s bull market.”

“That is a sharp turnaround from last fall, when insiders suddenly stopped selling when the market reopened after the Sept. 11 terrorist attacks. That may have reflected patriotism, or at least a concern that insiders who sold stock would look bad when their transactions were made public. Or maybe they just thought prices were unreasonably cheap. If so, that opinion has changed.”

“Whatever their motivation in October, insiders who bought stock generally did well as the market made a dynamic charge in the fourth quarter. Now some of the same insiders are selling the shares they bought then. Others who did not buy are selling, too.”

“Just what is causing the selling is worthy of speculation. On the benign side is the suggestion that a lot of insiders have learned from Enron’s 401(k) debacle how unwise it is to concentrate one’s wealth in any stock, particularly that of one’s employer. The selling would therefore simply reflect a desire to diversify.”

“Robert Barbera, the chief economist of Hoenig & Company, offers a more cynical Enron lesson, this one based on the rapid rise in the number of accounting investigations being started by the Securities and Exchange Commission. ‘If you believe people cooked the books, then right now the cooks should be selling,’ he said. In fact, he added, executives who acted properly may also be concerned. ‘We are now at a point where accepted accounting principles of the late 1990’s that were used in a great many companies can be seen as aggressive,’ he said. ‘If you are an insider who knows you were as aggressive as the next guy, you’ve got some anxiety.’ “