I only buy based on insider information...

Supposedly this is illegal.

If that were the case there would a lot of people in jail. Insider information is one of the critical aspects to successful investing. If you don't have the information, you cannot make a wise investment.

Insider trading means talking to people. As many people as you can. You listen, they talk. I once picked up a great tip on Multi Choice on a hike with some friends of friends  - one of whom happened to be a financial manager. He commented he couldn't understand why the share price was so down at that point in time. The business was doing well, better than ever in fact.

So I bought. I never even talked to the guy. And I made a cool 43% in under 4 months.

Insider trading is about listening to people in the industry. Warren Buffett is 100% correct when he says you should not invest in a business you do not understand. If you do, you will lose money. As an engineer I have obvious access to companies and other engineers who do things that I can grasp and get my head around. This is important to me. Understanding what makes a great company profitable allows me to assess information I have gleaned from listening, reading and watching the bigger trends to evaluate my risk of using my insider information with a view to making a purchasing decision or not.

Sometimes insider information is freely available. I found a share announcement in dealings by a director for a small telecoms company in South Africa. I have met the MD before and I like the man. Honest and straight forward. So when he invests lots of his money in his own company, its a no brainer. Buy! So I did.

Do you get the gist? Insider information is freely available. If you are considering a share purchase make sure that a substantial part of your homework is nosing around looking for as much insider tips and assessments as you can lay your grubby hands on. Use this information to correlate your research but without letting it compromise your investment research and strategy - if the two are at odds with each other, then don't make the investment. Patience my friends, is the Key!