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Chairman and Chief Executive Bill Gates sold $1.8 billion in stock as Microsoft's shares more than doubled, according to research firm Washington Service.Executives purchased $2.8 billion in shares during the year, a 23 percent increase. Conseco Inc. officers topped the list of buyers for a second straight year, spending $143.8 million as the insurer's shares fell by about a third, Washington Service said.Buying and selling by insiders proved to be good indicators of where the market headed during the year, analysts said. Officers sold the bulk of their shares in the first half, before the Dow Jones Industrial Average fell 21 percent in the six weeks ended Sept. 1. After that decline, buying by executives picked up before tailing off near yearend. ``These folks are pretty prescient,'' said analyst Frank Ponticello, who follows insider trading for Prudential Securities Inc. ``Insiders are the quintessential value players.''Conseco said it encourages officers to buy stock by arranging loans for them. Microsoft said Gates regularly sells shares to diversify his holdings, while a spokesman for Allen's Vulcan Ventures wasn't immediately available for comment.It's no surprise insiders sold shares, given the 17 percent rise in the Dow Jones Industrial Average this year, analysts said.Still, persistent selling doesn't mean a stock is headed for a fall, because executives have many reasons to sell: to finance a home purchase or diversify their investments. Typically, twice as many sales as purchases are reported by insiders, who are required to disclose their moves to the SEC, said Bob Gabele, president of insider research firm CDA/Investnet firm.Buying tends to be a better indicator because in insiders usually make purchases because they see their companies as good values, Gabele said.Top SellersTechnology companies racked up the biggest sales. They tend to use stock options rather than big cash salaries to compensate employees. That can leave top executives with most of their wealth tied up in stock and options. ``You have to be careful'' in interpreting insider sales at technology companies, said Ricky Harrington, market analyst at the Interstate/Johnson Lane securities firm in Charlotte, North Carolina. ``At some point, stocks represent the bulk of their assets. It makes good sense to diversify.''Insiders at the Redmond, Washington-based Microsoft sold $5.8 billion in stock during the year, more than twice as much as a year earlier, said Washington Service. The rise in Microsoft stock helped it pass General Electric Co. as the nation's most- valuable company.Dell Computer Corp., whose stock has more than tripled the past year, was No. 2 in selling at $1.5 billion, said Washington Service. Other big sellers included executives at Intel Corp., Gateway 2000 Inc. and America Online Inc.Dell said Chairman and CEO Michael Dell sells shares on a regular quarterly schedule to diversify his portfolio. Spokesmen for other companies couldn't be immediately reached.Big BuyersConseco shares have fallen since the life and health insurer agreed to buy money-losing consumer finance company Green Tree Financial Corp. for $6.5 billion. Yet the acquisition could result in more consistent earnings over the long haul, said money manager John Ray, president of Legacy Asset Management Inc., which owns the shares.Conseco Chairman and Chief Executive Stephen Hilbert spent $42.7 million on shares of the Carmel, Indiana, company. ``It's a very cheap stock,'' Ray said. ``Management is buying the stock for their own account aggressively. That tells you something about the value that exists.''Conseco said it considers owning stock a better incentive for officers than options. Options benefit the executives when the stock rises, but only as shareholders do officers also lose money when a stock falls, said spokesman James Rosensteele.Steel processor Shiloh Industries Inc. ranked No. 2 in purchases with $60 million. Other big buyers were found at CCC Information Services Inc., which processes claims for auto insurers, investment firm PEC Israel Economic Corp., sunglasses maker Oakley Inc., and aluminum can company Ball Corp.Purchases were most common among executives of companies with stock market values of less than $5 billion. The Russell 2000 index of smaller-capitalization stocks has fallen 16 percent since peaking on April 22.Good IndicatorsInsiders were especially timely in their trades this year, analysts said.In the spring, there were five sellers for every two buyers before the overall stock market slumped on concerns over weak economies in Russia, Asia and Latin America.Following the decline, insiders bought twice as many shares as they sold, which analysts said foreshadowed the rebound to new highs. ``Insiders are opportunistic,'' said David Coleman, a money manager at Insider Watershed Group, a Washington-based hedge fund that invests in stocks favored by inside purchasers.In recent weeks, selling has picked up. There were 1.2 sellers for each buyer in the five weeks ended Dec. 21, which was the strongest selling since July 20, said CDA/Investnet.Still, buying has remained strong among many of the stocks whose prices had declined sharply, such as real estate investment trusts, chemical makers, hotels and oil and gas producers. ``It bodes well for a potential reversal'' for smaller- capitalization stocks, said Ponticello. ``We've probably had the end to the bear market in small-cap stocks.''  <A HREF="/bbn/index.html"><IMG BORDER="0" SRC="/gifs/more_stories02.gif" WIDTH="130" HEIGHT="17"></A> </TD> </TR> </TABLE> </TD> </TR> <TR> <TD VALIGN="TOP" ALIGN="LEFT" COLSPAN=3><HR SIZE="2" ALIGN="LEFT" WIDTH="620"></TD> </TR> <TD></TD> <TD VALIGN="TOP" ALIGN="LEFT"> </TD> <TD VALIGN="TOP" ALIGN="LEFT"> © Copyright 1998, Bloomberg L.P. All Rights Reserved. </TD> </TR> </TABLE> </BODY> </HTML>