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Insider

An insider in investing is someone who officer, director, or more than 10% owner for the company being discussed.

Expanded Definition

The term "insider" comes up in finance most often in discussions of insider ownership or insider trading.

Insider Ownership

One of the things that many investors look for in a company is high insider ownership. This seems to indicate that insiders, those who probably know the company best, are confident of its future success. While not a perfect indicator, it often is a characteristic of stocks that become 100-baggers or better.

The flip side of this is that companies where the insiders own less than 10% of the common stock are liable to be poor long-term investments, though profitable short term trades are not impossible.

Insider Trading

This is the practice of buying or selling shares of a company's stock (or some other security) based on knowledge that was acquired as an officer of the company, and that is not available to the general public. This is illegal.

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