• Despite recent upside momentum, Alphabet stock has been dragging this year.
• Insider selling is a near-term concern due to confidence issues.
• Investors may want to adopt a wait-and-see approach.

In what has been a wild start to the new year, arguably most investors are already on their knees, begging the market gods to shine some favor on their portfolio. That goes for big blue chips like Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) stock.

While it’s an industry stalwart, Google hasn’t been spared the red ink.

Soaring consumer inflation, an ongoing coronavirus pandemic and more recently, an outbreak of heavy armed conflict in eastern Europe have all converged to make life quite miserable for many growth names. However, GOOG stock has been on a rebound in recent sessions thanks in part to Wall Street pricing in an eventual resolution to the Russian invasion of Ukraine.

Against the bigger picture, GOOG stock is interesting because the underlying company essentially owns the internet. Through the Google search engine, online advertising platform, email network and myriad other tools, it’s almost impossible to conduct business on the internet without interfacing with Alphabet’s product ecosystem.

If only the insiders – that is, those closest to the business – would take a lesson out of their own marketing brochure and buy GOOG stock. That would be something, but it’s just not happening.

Why Insider Transactions Are Important

To be clear, no one investment tool or gauge should be the exclusive deciding factor of whether you want to get involved with a publicly traded company or not. Still, insider transactions represent a very powerful indicator because it cuts through the corporate baloney.

If a stock was really something that people need to buy, then those who are intimately tied to the underlying company – whether that’s a heavy-hitting investor or one of the key executives – should be putting their money where their mouth is.

True, not buying their own stock doesn’t necessarily mean that it’s a dud investment. Still, the general consensus is that if insiders are buying their own equity units, they’re doing so for one primary reason: they believe owning shares represent a better opportunity than using that same money to acquire a different investment.

But what happens when insiders sell their stock? Such actions are not necessarily negative, with many executives doing so to pocket some well-deserved profits while still keeping a significant stake.

However, insider selling becomes quite tricky when it’s especially pronounced over a long period, which is the case for GOOG stock.

Can’t Exit GOOG Stock Fast Enough

Based on information provided by Gurufocus.com, insiders have been very busy exiting their stake on GOOG stock. Again, this action by itself is not necessarily indicative of a negative outlook. Maybe a significant expense came up for certain executives and they needed liquidity right away. Or they may want another mansion or five.

However, as a retail investor, I want insider transactions to be a two-way street. So, when the overwhelming direction of GOOG stock in recent years is to dump it – actually, it’s been exclusively sell orders for the last few years – it’s worrying.

Did all the executives and power players have unforeseen emergencies that came up? I doubt it. While I don’t want to speculate, it’s likely that they viewed GOOG stock as overstretched and wanted to cash out at favorable prices.

To be honest, I’m not really sticking my head out with the above statement. In 2021, CEOs and corporate insiders sold a record number of stock. And you know what? I’m not blaming them. I’d do the same in their situation.

But here’s the other side to that equation. If the insiders believe selling GOOG stock is the right move, why should you buy it?

Don’t Overthink It

To repeat, I don’t think it’s wise to use any one metric to base your entire investment decision. As well, I think longer term, GOOG stock makes for a compelling upside idea. However, it faces significant headwinds for the time being as the aforementioned obstacles – inflation, pandemic, war – are unresolved.

Therefore, people shouldn’t overthink the insider selling. If Alphabet stock had a very high probability of upside success, the insiders would be buying it. Right now, the experts believe the downside argument is more credible. With all that’s going on, why play the contrarian at this juncture?

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.