Just saw this article at http://www.stockbox.tv/insider-selling-jumps-to-highest-level-since-2007/. Original source is Bloomberg. Scares me, especially with today's run up with all this bad news AND with the recent 30% run up from the bottom.... stockbox.tv said: Is a 2009 stock market crash looming? Here’s why it might happen..
April 24 (Bloomberg) — Executives and insiders at U.S. companies are taking advantage of the steepest stock market gains since 1938 to unload shares at the fastest pace since the start of the bear market.
Gap Inc.’s founding family sold $45 million of shares in the largest U.S. clothing retailer this month, according to Securities and Exchange Commission filings compiled by Bloomberg. Daniel Warmenhoven, the chief executive officer at NetApp Inc., liquidated the most stock of the storage-computer maker in more than six years. Sales by the co-founders of Bed Bath & Beyond Inc. were the highest since at least 2001.
While the Standard & Poor’s 500 Index climbed 26 percent from a 12-year low on March 9, CEOs, directors and senior officers at U.S. companies sold $353 million of equities this month, or 8.3 times more than they bought, data compiled by Washington Service, a Bethesda, Maryland-based research firm, show. That’s a warning sign because insiders usually have more information about their companies’ prospects than anyone else, according to William Stone at PNC Financial Services Group Inc.
“They should know more than outsiders would, so you could take it as a signal that there is something wrong if they’re selling,” said Stone, chief investment strategist at PNC’s wealth management unit, which oversees $110 billion in Philadelphia. “Whether it’s a sustainable rebound is still in question. I’d prefer they were buying.”
Insiders Sell
Insiders from New York Stock Exchange-listed companies sold $8.32 worth of stock for every dollar bought in the first three weeks of April, according to Washington Service, which analyzes stock transactions of corporate insiders for more than 500 institutional clients.
That’s the fastest rate of selling since October 2007, when U.S. stocks peaked and the 17-month bear market that wiped out more than half the market value of U.S. companies began. The $42.5 million in insider purchases through April 20 would represent the smallest amount for a full month since July 1992, data going back more than 20 years show. That drop preceded a 2.4 percent slide in the S&P 500 in August 1992.
The index rose 1 percent to 851.92 yesterday after better- than-estimated earnings at companies from Marriott International Inc. to ConocoPhillips and eBay Inc. overshadowed falling home sales and higher jobless claims.
Looking Forward
The S&P 500 has jumped 26 percent in 32 trading days through yesterday, the sharpest rally since 1938, on speculation the longest recession since World War II will soon end.
Stocks rebounded as President Barack Obama outlined a $787 billion package of spending and tax cuts to stimulate growth, the Treasury unveiled plans to finance as much as $1 trillion in purchases of banks’ distressed assets and the Federal Reserve pledged to buy more than $1 trillion of Treasuries and bonds backed by mortgages to drive down interest rates.
With corporate America stuck in its seventh straight quarter of earnings decreases, the longest in seven decades, executives may have become too cautious, said Penn Capital Management’s Eric Green.
Investors are looking to the final quarter of the year, when S&P 500 companies will increase operating income by 74 percent, according to analyst estimates compiled by Bloomberg. They forecast profits will fall 32 percent in the second quarter and 19 percent in the third.
“Things are a lot better than they were,” said Green, director of research at Penn Capital, which oversees $3 billion in Cherry Hill, New Jersey. Recent history also shows that “insiders have been wrong,” he said.
Confidence Game
Jeffrey Immelt, CEO of General Electric Co., purchased 50,000 shares at prices from $16.41 to $16.45 on Nov. 13, when the stock closed at $16.86. The shares have since fallen 30 percent after the Fairfield, Connecticut-based company reduced its dividend for the first time since 1938 and lost the AAA credit rating from S&P that it held for more than 50 years.
Insiders of consumer and technology companies have been selling the most stock relative to the amount they purchased this month, data compiled by Washington Service show.
John Fisher, Robert Fisher and William Fisher, whose parents Donald and Doris Fisher founded San Francisco-based Gap in 1969, sold a combined 2.99 million shares at between $15.11 and $15.36 a share on April 3 and April 17, SEC filings show. Gap rebounded 54 percent from its low on March 6. The stock gained 0.5 percent since the Fishers’ last sale.
Reasons to Sell
Gap spokesman Bill Chandler said that “from time to time, based upon the advice of financial advisers, the members of the Fisher family will decide to sell stock.”
Warren Eisenberg and Leonard Feinstein, who founded Union, New Jersey-based Bed Bath & Beyond in 1971, sold 1.05 million and 1.1 million shares at $30.90 apiece on April 9, the most since at least December 2001, the filings show.
The offerings came one day after Bed Bath & Beyond surged 24 percent, the biggest advance in nine years, on a smaller than estimated decline in fourth-quarter profit. Spokesman Ken Frankel said Eisenberg and Feinstein, who currently serve as co- chairmen of the largest U.S. home-furnishings retailer, sold for “estate-planning purposes and diversification.”
At NetApp, Warmenhoven sold 1.25 million shares, the most since at least 2002, for about $21.3 million between April 3 and April 21 at prices from $16.10 to $18.10 a share, the SEC filings show. Shares of the Sunnyvale, California-based company, up 47 percent from the March 9 stock market low of $12.52, gained 1.8 percent since then.
Moving On
Warmenhoven sold shares he received from exercising stock options that were due to expire next month, according to an e- mailed response by Lindsey Smith, a spokeswoman for NetApp. He reaped a profit of about $7.3 million selling the shares at an average price of $17.08 apiece, based on the conversion price of $11.25 for options he held, the data show.
“They’re going to say, ‘Thank you very much,’ and move on to cash or something else,” said David W. James, who helps manage about $2 billion at James Investment Research Inc. in Xenia, Ohio. “This is not a situation that suggests to us we’re seeing an economic recovery.”
Xnarg said: Nothing bad can happen now. Everything is going to be great. you forgot the sarcasm tag!
For the last 3 weeks I have watched the market rise.... and repeatedly said WHY?
I have been caught in the biggest short squeeze.... and am trying to wait it out, because I KNEW the end of March/ beginning of April was just a BOUNCE up.
However, with Geithner (and crew) pushing the bank stress tests further and further into the future, (end of march, no, wait, end of april, no, wait,,, May 4th!) and SOME decent reports, the IDIOTS are buying, and the insiders are selling. Tons of resistance on the way down, but insiders/market makers are bouncing the slides before they avalanche.
I am ADDING funds to my brokerage.... and finding some more good shorts. IF ONLY the market would truly cooperate! It could be even bumpier for the next few weeks.... and I could bust out! If I do, I guess I won't be posting for a while.... gonna have to scrimp my pennies (turn off internet, eat RAMEN, and work (instead of reading FWF))>!!!
I just wanna know what news people are watching? 4 more banks failed today (costing FDIC $700M)... GM took another $2B (to shut down the factories for 9 weeks this summer, to NOT build cars that are NOT selling.... and the parts companies haven't yet thrown in their WISHLIST for STIMULUS to stay alive!
*Not a doom-mongerer, just realistic, and performing my due diligence*
jkimcpa said: Yes, dumb retail money is rushing to Mutual Funds and Fund managers are buying every small dip and propping up prices.
I am not so sure it is retail dumb money --- retail dumb money got stuck in the crash and is holding ... I would guess that some of the run-up is sideline smart money that survived the crash
don't we already have a stock market discussion thread?
Technologist said: I just wanna know what news people are watching? 4 more banks failed today (costing FDIC $700M)... GM took another $2B (to shut down the factories for 9 weeks this summer, to NOT build cars that are NOT selling.... and the parts companies haven't yet thrown in their WISHLIST for STIMULUS to stay alive!
Sell on the good news buy on the bad?!?
*shrug*
It is truly gambling at this point and the house is winning (at least in my case).
Maybe Costanza has it right. Whatever you think you should do...do the opposite.
mttatkns
Thrifty Member
posted: Apr. 25, 2009 @ 1:16a
ColbyS said: Maybe Costanza has it right. Whatever you think you should do...do the opposite.No, that's Cramer. Whatever Cramer says to do, do the opposite. Rinse and repeat; at high enough stakes, you will soon be a billionaire.
MyDiscoverSucks
Member
posted: Apr. 25, 2009 @ 1:25a
Watch the tape, everything is right in front of your face.
When will frightened neophytes realize that nobody, "expert" or not, has the slightest idea what's going to happen, particularly when they opine most authoritatively? Aside from dubious entertainment value, their predictions are no more, and usually less, reliable than a coin-flip. Will these inane, anxiety-driven "discussions" over the direction of the markets ever end?
user12345
Senior Member
posted: Apr. 25, 2009 @ 3:20a
dudetheobscure said: When will frightened neophytes realize that nobody, "expert" or not, has the slightest idea what's going to happen, particularly when they opine most authoritatively? Aside from dubious entertainment value, their predictions are no more, and usually less, reliable than a coin-flip. Will these inane, anxiety-driven "discussions" over the direction of the markets ever end?
exactly. Those predictions are worthless.
It's much better to talk about FACTS. I read that the amount of money "on the sidelines", which is actually something that is measurable because it's parked in liquid cash instruments, was at its highest level ever just prior to the recent low in the beginning of March. Historically, when the amount of money on the sidelines was that high, a stock market rally followed (yes, someone graphed the two values and computed the correlation). Of course the market doesn't behave exactly the same way at different times, but at least this kind of information gives higher probability to predictions about a bottom.
MyDiscoverSucks
Member
posted: Apr. 25, 2009 @ 4:59a
That's not a good form of arbitrage, the liquid cash could have increased further still. Nobody would have known it was the 'highest level' at that point until after the fact.
There is more than one reason why insiders would be selling stock after the recent run-up. These very insiders recently experienced what it means to have a large investment in any one company when the markets take a dive. They lost their shits, socks and shoes. Now, when their companies have recovered they've had second thoughts about a wealth management plan which includes owning a million dollars of their own company's stock, so they sell to protect wealth. I have experienced a similar impulse - owning 1100 shares of that fruity computer stock, which is a goodly portion of my investment wealth, and finally coming back into the black, I've sold off a couple hundred shares to let me diversify a bit into other investments.
Now, I'm no an insider, of course. And, perhaps I am dumb retail money snapping up Failed Motor Company, Admiral Electric Company and other stocks (I sold out of my Bank that never sleeps after a huge run-up). I'm certainly *not* pouring over these company's financial sheets, so yes, in one sense I am an ignorant investor. On the other hand, treading where others fear to go has been a very profitable activity these past months.
user12345 said: dudetheobscure said: When will frightened neophytes realize that nobody, "expert" or not, has the slightest idea what's going to happen, particularly when they opine most authoritatively? Aside from dubious entertainment value, their predictions are no more, and usually less, reliable than a coin-flip. Will these inane, anxiety-driven "discussions" over the direction of the markets ever end?
exactly. Those predictions are worthless.
It's much better to talk about FACTS. I read that the amount of money "on the sidelines", which is actually something that is measurable because it's parked in liquid cash instruments, was at its highest level ever just prior to the recent low in the beginning of March. Historically, when the amount of money on the sidelines was that high, a stock market rally followed (yes, someone graphed the two values and computed the correlation). Of course the market doesn't behave exactly the same way at different times, but at least this kind of information gives higher probability to predictions about a bottom.
Money will always be "on the sidelines" after a market drop - because fear reigns and investors have cashed out. And when they ultimately decide to buy, stock values will rise and cash will be depleted, which is to say that there will always be lots of money "on the sidelines" just before people spend it. Nonetheless, investment "experts", with their mathematical charts and graphs, will pronounce, with 20/20 hindsight, that a cash accumulation somehow "predicts" a rally - utter rubbish, but, like newsletters and timers, sadly given credence.
sethdallob
Senior Member - 1K
posted: Apr. 25, 2009 @ 3:40p
Why is OP marked red so bad? I think this is a good thread - I, too am worried.
1. Insider selling. 2. Stress test is b/s and a fluff job. 3. Unbelievable amount of stimulus/debt spending/creating money out of thin air from state gov't., fed gov't, fed. reserve 4. Treasury yields unsustainably low. 5. Unemployment only going higher for at least a year. 6. The entire runup feels like a confidence game rather than any fundamentals - the best I can say is things are getting worse less quickly than in Q4 and relatively better than England/Europe. 7. Very likely default on soverign debt of several countries (much larger than Iceland).
I don't see a mechanism for a real economic recovery on the horizon and I think when the market realizes that any 1 of the above 7 assertions are true it goes straight down again.
Technologist said: For the last 3 weeks I have watched the market rise.... and repeatedly said WHY?
I have been caught in the biggest short squeeze.... and am trying to wait it out, because I KNEW the end of March/ beginning of April was just a BOUNCE up.
kantscholar said: Technologist said: For the last 3 weeks I have watched the market rise.... and repeatedly said WHY?
I have been caught in the biggest short squeeze.... and am trying to wait it out, because I KNEW the end of March/ beginning of April was just a BOUNCE up.
Appreciate the link.... although I am not into pretty graphs and drawings (or art)!
It could be wishful thinking on my part, but I really think that suddenly people will say CRAP! and start selling, shorting, and otherwise pushing everything back down where it belongs!
I think greed has been the biggest reason for the recent push up. Just like what happened in housing. Mortgages started to fail, people saw 30% drops in price, wanted to buy BEFORE they started back up. That created a false slowdown in the price drops.... and now the slide down is starting again... all those people that jumped in will get hammered (unless they stay in the house for 10-15 years)... but they could have gotten a better discount if they had waited.
Moving money now, to prepare for the big short-fest coming up.
user12345
Senior Member
posted: Apr. 25, 2009 @ 11:09p
behold the "expert" speaking, again with worthless predictions.
I would look at known historic data to derive some more "probable" conclusions. For example, that recessions usually last less than two years, and this recession will also end at some point, so most likely that point is not that far off. And why would you say "everything should be down where it belongs" ? Does the market really belong where it was in 1997 ? Maybe if we are at the peak of the recession, but definitely much higher (closer to where it was in recent years) when the recession ends. Of course we can't know for sure when the recession will end, but let's say it would be extremely unlikely for it to last for more than a year.
sethdallob
Senior Member - 1K
posted: Apr. 25, 2009 @ 11:26p
user12345 said: behold the "expert" speaking, again with worthless predictions.
I would look at known historic data to derive some more "probable" conclusions. For example, that recessions usually last less than two years, and this recession will also end at some point, so most likely that point is not that far off. And why would you say "everything should be down where it belongs" ? Does the market really belong where it was in 1997 ? Maybe if we are at the peak of the recession, but definitely much higher (closer to where it was in recent years) when the recession ends. Of course we can't know for sure when the recession will end, but let's say it would be extremely unlikely for it to last for more than a year.
This recession, by almost all objective and subjective measures, is far worse than any post-WWII recession. While it most likely won't be another Great Depression, it's certainly a lot worse out there than you are imagining.
Technologist said: I just wanna know what news people are watching? 4 more banks failed today (costing FDIC $700M)... GM took another $2B (to shut down the factories for 9 weeks this summer, to NOT build cars that are NOT selling.... and the parts companies haven't yet thrown in their WISHLIST for STIMULUS to stay alive!
*Not a doom-mongerer, just realistic, and performing my due diligence* The total number of bank failures last year was 25 and there are 29 (so far) this year (accelerating). The savings and loan crisis resulted in 750 failed S&L's. There were 25,000 banks in 1929. Only 15,000 survived to 1933 (for a little perspective).
As for GM, they have so many issues. Ford, on the other hand, stated that they see a bottom and will be "increasing" production by 25% during this 2nd quarter. Maybe they are just picking up slack from GM/Chrysler's failures.
As for this rally, it is what it is. The market is still down 45% from October 2007 so maybe it's just a correction upward to a completely oversold market. If the government has created an environment for inflation (through printing money), stocks will be affected the same as anything else (including your $50 loaf of bread! ) - they will go up (while your wages go down vs inflation).
user12345 said: behold the "expert" speaking, again with worthless predictions.
I would look at known historic data to derive some more "probable" conclusions. For example, that recessions usually last less than two years, and this recession will also end at some point, so most likely that point is not that far off. And why would you say "everything should be down where it belongs" ? Does the market really belong where it was in 1997 ? Maybe if we are at the peak of the recession, but definitely much higher (closer to where it was in recent years) when the recession ends. Of course we can't know for sure when the recession will end, but let's say it would be extremely unlikely for it to last for more than a year.
Why discount what I say, yet think that your opinion stands above all? "Expert"? I think not (nor do I claim such). This is a discussion thread, on a discussion forum.
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