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Signaling is the idea that you can get the insight of information that is not public yet by watching the behavior of insiders with access to the private informa

Signaling is the idea that you can get the insight of information that is not public yet by watching the behavior of insiders with access to the private information. For example if the officers and board members of a company are selling shares in a company, they probably think the company is going to decline in value. At the same time, they might make statements saying everything is great and getting better, but the signal that they are selling is stronger than their words.

7Figures2Commas 12y ago
In the public equities markets, a lot of amateurs lose money making assumptions based on lazy analyses of Form 4 filings. There are a variety of reasons insiders sell which have absolutely nothing to do with the health of their companies. Trying to glean meaningful and profitable insight from these filings is a lot more difficult than you suggest. The same dynamic applies to startup investments, particularly in the early stages. There are any number of reasons why an investor may not make a follow-on investment. These range from the personal finances of the investor to conflicts that have emerged in the investor's portfolio. More importantly, at the seed stage, even the most successful angel investors (if they're honest) will readily admit that it's damn near impossible to tell the future winners from the losers, and anybody who has been investing actively can tell stories about ones that got away, so there's limited value in playing follow the leader. Signaling is a bigger issue in later stage financings, but there too, if you make assumptions without digging deeper (something any good investor does), you're bound to draw the wrong conclusions.