Tuesday, June 23, 2009

If the rats are fleeing, what does that tell you?

If the rats are fleeing a sinking ship, how wise is it to stay on board?

The R/E shills insist that the market crash is over and that the recovery has begun. The burgeoning stock market is pointed to and the mantra of 'green shoots' is repeated week after week while the Real Estate Associations play the 'buy now or be left behind' card once again.

But is economic recovery really just around the corner?

Not according to captains of industry.

Oh, they still publically say all the right things. "The situation is not as bad as it was, the econonmy is improving, blah, blah, blah." But actions speak louder than words.

With that in mind, let me ask you a question.

If the economy is improving, and the DOW is rocketing back to it's former 14,000 point level, would you dump your stock when the DOW is only at 8,500?

According to a report from Bloomberg, CEOs, directors and senior officers of US companies have been selling their personal shares of their own companies' stock at the fastest pace since credit markets started to seize up two years ago.

Insiders of Standard & Poor’s 500 Index companies were net sellers for 14 straight weeks in data compiled by InsiderScore.com. Since these executives presumably have the best information about their companies’ prospects, what does that tell you?

“If insiders are selling into the rally, that shows they don’t expect their business to be able to support current stock- price levels,” said Joseph Keating, the chief investment officer of Raleigh, North Carolina-based RBC Bank, the unit of Royal Bank of Canada that oversees $33 billion in client assets. “They’re taking advantage of this bounce and selling into it.”

The last time there were more U.S. corporations with executives reducing their holdings than adding to them was during the week ended June 19, 2007, the data show. The next month, two Bear Stearns Cos. hedge funds filed for bankruptcy protection as securities linked to subprime mortgages fell apart, helping trigger almost $1.5 trillion in losses and writedowns at the world’s biggest financial companies and the 57% drop in the S&P 500 from Oct. 9, 2007, to March 9, 2009.

And the weasels are selling again, hmmm.

Talk the market up and then dump your shares on the suckers rushing in.

It's almost a metaphor for real estate sales in Vancouver the past few months, don't you think?


Email: village_whisperer@live.ca
Click 'comments' below to contribute to this post.

Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of sponsors or firms affiliated with the author(s). The author may or may not have a position in any company or advertiser referenced above. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.


  1. some day the consumer will learn about "moral hazard"

    Is there a hilarious story relating to why your putting a disclaimer on your site now?

  2. Hilarious story? No, not at all... just the advice of a blogger friend. It will follow each post for a week or so and then be confined to the bottom of the blog.