OK, it's official: Wall Street is still clueless as far as Main Street is concerned.
Otherwise, why would investors keep driving stocks higher in the face of the recent sharp rise in yields, which will make it that much harder for businesses to find their bearings in an already shaky economic environment?
Just as telling, why are investors buying shares in corporate America when corporate executives -- the individuals on the ground who actually know what is going on -- are on the other side of the trade, as the Pragmatic Capitalist reveals (below) in "Despite "Green Shoots" Insider Sales Spike"?
The latest data on insider selling shows little relief in the relentless unloading of company stock by corporate insiders. In the last two weeks insiders sold over $335MM in stock vs listed insider purchases of just over $12MM. As has been the trend over the course of the last few weeks the list of insider selling has been long and the amounts have been staggering. The buy side, on the other hand, is represented by low rated, low priced stocks whose insiders rarely purchase over $500K.
One might think that with all of these “green shoots” the insiders at major U.S. corporations would begin buying up their own shares voraciously. Especially after a nice little run like we’ve seen lately. After all, with stocks still 35% off their highs and a full blown economic recovery (supposedly) on the horizon it would make nothing but sense than to buy your own shares, right?
Although there were signs of life in early May the overall trend in buying remains very low. As we’ve noted before it’s not the mountain of selling that most concerns us, but the total lack of buying. Insiders sell for many reasons, but they only buy their own stock when they are confident that the price will rise. As of now, insider buying remains incredibly weak which is more than likely a vote of (no) confidence in future business operations.
If my recollection serves me right than some of those execs actually bought shares of their companies back in October/November 2008.
Funny, how you can profit several times from driving your company into the ground.
First there is an assured "bonus". Then you buy shares of your company at low prices, go to the government for support - which you know you will get - and then sell those shares at a hefty profit.
Posted by: Alexandra | June 05, 2009 at 03:05 PM
LOLZ!
You know why there are no buyers... any capital available is being used to prop this bad boy up!
Gotta <3 our PPT boys.
Posted by: Jr Deputy Accountant | June 05, 2009 at 08:07 PM
Personal opinion, the stock market is still going up because people are still saving for their retirement and still buying into the conventional wisdom that stocks are the way to grow their portfolios. Given the current upheaval, government interference in private businss, total attempts to change contract law by putting the secured creditors last, etc., I don't think those are valid assumptions. Tracy Burns said it best earlier this week on FBN (Cavuto's show, I think) - everything we know is turned upside down and the old rules don't seem to apply anymore.
Posted by: Mar | June 05, 2009 at 11:48 PM
"...why are investors buying shares in corporate America..."
Investors?
Since when did JPM become an "investor"?
http://zerohedge.blogspot.com/2009/06/proudly-gunning-every-market-upswing.html
This rally will end when JPM, AMEX etc. are done with their secondary offerings...
http://www.theundergroundinvestor.com/2009/06/telltale-signs-a-significant-us-market-correction-wont-happen-in-the-immediate-future/
Unfortunately for them, volume has been falling for some time now. IMO they had better hurry up, because even J6P is starting to get suspicious.
Posted by: Dnarby | June 06, 2009 at 12:18 AM