Last week, I explained why investors should pay no attention to the well-orchestrated insider buying at struggling broker E Trade Financial Corporation (NASDAQ: ETFC) when I said that:

The buying was in all probability coordinated to send a knowledge to investors — and Wall Street is eating it up. But the reality is that $1.9 million is just not that much money in the context of the amount that the company top executives are paid. The insider buying, in conjunction with the money E*Trade will spend on Super Bowl ads, looks like a pretty desperate and obvious effort by the company to convince investors and customers that the company is OK.

Unfortunately, The Wall Street Journal is bestowing credibility upon that obvious move to restore investor confidence, with an ode to

the insider buying in Wednesday’s Inside Track column (subscription required). E*Trade spokeswoman Pam Erickson was even gracious suitable to supply a quote, telling the Journal that the moves signals that we “have confidence in the turnaround plan we laid out and the future of the franchise.”

Of course, back when the stock was trading in the double digits, Ms. Erickson did not say “These sales are a sign of our management’s utter lack of faith in their own abilities.”

Insider trading can be a good indicator of sentiment, but not when it’s such an obviously coordinated effort to drum up stories like the one that presented in the Wall Street Journal nowadays.

Original post by Zac Bissonnette

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