Ask the Fool

Q I saw that some insiders at Activision Blizzard have recently sold about 3 million shares of its stock. When insiders sell thousands or millions of shares, who are the buyers?

— P.D., Biloxi, Miss.

A Shares sold by insiders such as officers, directors or owners of a company are sold in the market, where for every seller there's usually a buyer. The catch is that if there are many more shares for sale than there are interested buyers, the price will drop — until it reaches a point at which buyers will buy.

Those 3 million shares might seem like an awful lot to us, but remember that in the course of a typical trading day, many companies experience a high volume of trading. In recent months, about 16 million shares of Activision Blizzard have been bought and sold each day. By contrast, General Electric's average volume tops 175 million shares, and The Washington Post Co.'s is just 40,000 or so.

It can be smart to examine insider purchases and sales for companies that interest you. Some occasional selling is routine, but someone unloading a large portion of his shares can be a red flag. When insiders buy, though, it's hard to take that as anything but a bullish sign.

Q Can you recommend any books on value investing?

— L.W., Flint, Mich.

A Try "Value Investing: From Graham to Buffett and Beyond" by Bruce Greenwald et al. (Wiley, $20) or "The Intelligent Investor" by Benjamin Graham (Collins, $22). "One Up On Wall Street" by Peter Lynch and John Rothchild (Simon & Schuster, $15), meanwhile, offers a good introduction to investing, as do many Motley Fool books.