Guru Strategy: Stocks don't reflect the economy's danger signs, so beware


The stock market's fall last week was not dramatic enough to alarm investors. But there are signs that things could be getting worse. Jack Adamo, editor of the newsletter Insiders Plus, warns that danger lurks if individual investors remain complacent while bigger players quietly sell their investments and "slip out the back door."

It's worth listening to Adamo. Adamo focuses on insider transactions, which often can tip off investors as to where stock prices are headed. He also analyzes smart money plays by wealthy investors such as Warren Buffett and Sam Zell. What's more, he uncovers stocks that are undervalued as a result of special situations. The result of all this handiwork has been market-beating returns. Over the past five years, Insiders Plushas delivered an 8.7 percent annualized return, versus a loss for all the major averages, according to Hulbert Financial Digest.

DailyFinance interviewed Jack Adamo about the economy's danger signs.