Deep in their mountain eyrie, Toady's boffins slave night and day, as is well known, in pursuit of world harmony and economic concord. Now, flushed with the success of their earlier Toady Yacht Quotient (see MT's May issue), the eggheads have come up with another panacea for the world's ills: the Directors' Share Sales Index, or Dussy for short. How does Dussy work? Alas, the formula is classified until 2022 under our own Thirty Year Rule. In any case, Toady fears that few of his faithful but unsophisticated readership will have sufficient grasp of plasma physics to comprehend. In simply layman's terms, however, Dussy may be expressed as follows: there appears to be a direct and logarithmic correlation between the number of times a firm's directors flog shares in their firm and the performance of that firm's shares overall. Got that? Well, boys and girls, here is a simple experiment you can perform to see Dussy in action for yourselves. Ask mummy to add a copy of the Saturday FT to your normal subscription to Beano. Turn to the page where directors' share sales are recorded, and write down the names that appear there. Now turn to the prices page, and see how the shares of the earlier companies are performing. Voila! As soon as directors start unloading shares in their own firms, so the share prices of those firms begin to dip. For an example, take the best three performers on the FT's director's share sales page. In the space of a year or so, top scorer Mercury Asset Management's directors have clocked up no fewer than eight appearances. Mercury's share price at the end of July? 315p, 12p off the year's low. Next come SG Warburg (six directorial appearances, share languishing 7p off low at 452p) and pubs group Greenalls (five, on low at 303p). Do I hear dissenting voices? Very well, let us go on a little further and consider then the beleaguered chemical manufacturers MTM. Its shares now stand at 34p, down from a 1990 high of 290p. "Whatever happened in the interim"? those of you who have not been paying Toady absolute attention may ask. Well, MTM's ex-chairman, Richard Lines, made a guest appearance in the Saturday Pink' Un, selling £5.3 million of his equity in the firm. Enough? Well, just one more for the road: even the impregnable Hanson (three appearances, 11p off low at 203p) is not immune from Dussy's tragic inevitability. QED.
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