Judging from the way the stock market has behaved over the first couple weeks of 2010, it seems as though most investors have put all the problems of the past two years behind them. Yet there's one group of important investors that appears to be getting out while the getting's good -- and you should pay close attention to what they're doing and why they're doing it.

The only bears left?
2009 was a tough year for stock market skeptics. Despite repeated calls that the market's rally was built on a weak foundation of junk stocks, upward market momentum asserted itself throughout the year and has thus far carried over into 2010. Those who sat on the sidelines waiting for a seemingly inevitable correction paid the price as they languished in low-rate cash investments.

Now, nearly everyone seems to believe that stocks have nowhere to go but up. Three separate polls of investor sentiment show some of the most bullish readings since before the financial crisis struck. In the face of such a strong consensus, there's a lot of pressure for people who aren't fully invested to buy stocks before it's too late.

In contrast, there seems to be only a single contingent of shareholders who are selling shares right now. In many cases, though, they're selling off a lot of their shares -- and taking a big chunk of their money off the table.

Selling CEOs
Here are some of the company CEOs who have made substantial sales of shares in just the first two weeks of 2010:



Dollar Value Sold

Sale as % of Shares Owned


Paul Bulmahn

$17.26 million



Craig Donohue

$5.08 million


Qualcomm (NASDAQ:QCOM)

Paul Jacobs

$4.37 million


MasterCard (NYSE:MA)

Robert Selander

$3.64 million


Blackboard (NASDAQ:BBBB)

Michael Chasen

$2.17 million


Source: Yahoo! Finance.

In addition, other high-ranking executives have made major sales. Both of the co-chairmen of Bed Bath & Beyond (NASDAQ:BBBY) reported major sales of shares over the past week. One Ford Motor (NYSE:F) group vice president, Thomas Brown, sold nearly his entire stake in the company for just over $3 million, leaving him with just a $500,000 investment in Ford stock.

Going down?
Of course, there are a variety of reasons why executives choose to sell shares, and not all of them are signs of imminent doom for their companies. Because executives often receive compensation in stock or options, they can end up with dangerously high concentrations in company stock. From a personal financial planning perspective, those concentrations aren't ideal, and so diversifying one's portfolio to spread out risk makes a lot of sense. With the exception of Mr. Bulmahn, the executives in the table above all had what's called a 10b-5 plan in place to sell shares over an extended period.

Moreover, insiders have to report all affiliated transactions, even when they themselves don't necessarily have control of them. With Bed Bath & Beyond, for instance, the sales were made by related charitable foundations, not the executives themselves.

In many cases, though, insider sales are a troubling sign. Generally, no shareholder wants to see someone who has intimate knowledge of a company cashing out. And given the timing of these sales, it's entirely possible that executives have wanted to sell for some time but chose to wait until the beginning of the year for tax purposes. By doing so, they've deferred the income tax on any gains from their stock until they file their 2010 tax returns next year.

Wait and see
By itself, a sale by a company executive doesn't necessarily mean the stock is going to go down immediately. But insider sales do warrant closer attention. If you own a stock whose executives are selling their holdings, be particularly vigilant about possible shortcomings of the company. Unless you can come up with an explanation for why an insider is dumping shares that doesn't reflect badly on the company, you might do well to follow that insider's lead and sell your own shares.

Afraid the market will start falling again? Learn from Foolish options expert Jeff Fischer about how you can profit whether you're a bull or a bear.

Fool contributor Dan Caplinger takes pride in being more of an outsider than an insider. He doesn't own shares of the stocks mentioned in this article. Bed Bath & Beyond and Ford Motor are Motley Fool Stock Advisor picks. Blackboard is a Motley Fool Hidden Gems selection. The Fool's disclosure policy leaves you nothing to worry about.