Thursday, October 28, 2010

Baby Boomers: Get Out of the Stock Market Now, the Rug is Being Pulled Out By Insiders

CNBC reports insider selling-to-buying ratio for top firms is a staggering 3177 to 1

Eric Blair

If you're a baby boomer who still believes in the stock market since the financial collapse of 2008, listen up. The floor of this Ponzi scheme is about to drop out, leaving you punching a clock for some time to come and holding an empty retirement bag for your effort.  The engineered crash is coming and the elite are jumping ship in droves -- you should join them and get out ASAP.

Stock market insider selling has now reached record highs.  The trend has been increasing for the last several years, but now the ratios are getting beyond ridiculous.  Earlier this month, Zero Hedge reported that the insider selling-to-buying ratio is 2341 to 1.  Tyler Durden wrote:
After last week saw an insider selling to buying ratio of 1,411 to 1, this week the ratio has nearly doubled, hitting a ridiculous 2,341 to 1. And while Wall Street's liars and CNBC's clowns will have you throw all your money into "leading" techs like Oracle and Google, insiders in these names sold a combined $200 million in stock in the last week alone.
Today, CNBC reported that the insider selling activity at some of the largest traded companies is at an all-time high.  This can't be a good sign of things to come.  The article points to the analysis of Alan Newman, a market strategist who tracks insider trading: "The overwhelming volume of sell transactions relative to buy transactions by company insiders over the last six months in key leading sectors of the market is the worst . . . ever."  CNBC reported that industry leaders have a staggering 3177 to 1 insider sell-to-buy ratio:
The largest companies in three of the most important leading sectors of the market have seen their executives classified as insiders sell more than 120 million shares of stock over the last six months. Top executives at these very same companies bought just 38,000 shares over that same time period, making for an eye-popping sell to buy ratio of 3,177 to one.
The grand total for the three sectors are “as awful as we have ever seen since we began doing this exercise years ago,” said Newman, who was ahead on such trends as the dangers of high-frequency trading and ETFs before the ‘Flash Crash’. “Clearly, insiders are seeing great value only in cash. Their actions speak volumes for the veracity for the current rally.”
Also quoted in the CNBC piece was Simon Baker, CEO of Baker Asset Management, who said the insider data “is good reason for considerable caution once the price action fades,” and “insiders normally buy early and sell early too. Longer term -- 12 months out -- it is more of a red flag.”

It's pretty difficult to excuse these levels of insider looting, but the experts are doing their best to claim that these poor executives (the titans of their industries) must take profits from stock sales because their salaries and bonuses have been cut.  Who do they think they are kidding?  Wall Street is still paying record salaries and bonuses, reportedly worth $144 billion (about a $1000 for every working American).  There also has been very little news of other industry executives taking pay cuts, as American companies are holding record levels of cash to the tune of over a trillion dollars.  In fact, the flush-with-cash CEOs continue to blame the consumer class for joblessness.

Despite the mass exodus of executives from their own company's stock, the S&P continues to remain somewhat stable since gaining 16% from July lows.  Well, those gains seem somewhat pathetic since the value of the dollar -- measured against the human inflation indexes such as food and oil -- has plummeted.  Major food commodities are up over 50% since their July lows, while oil prices have climbed $10 to over $81/bbl, or around 14% for the same time period, with predictions to break the $100/bbl mark very shortly.  

Barely covering the cost of real inflationary measures is hardly success, especially with the current risks involved with being in the stock market.  These risks have only increased since the 2008 financial collapse that eventually caused the stock market to bottom out the mid-6000 range.  The market has been propped up with TARP funds and driven by scandalous front-running by Goldman Sachs and other large firms leading to 70% of stock purchases to be held for an average of 11 seconds. Consequently, these robo-trading programs have also been blamed for the freak "Flash Crash" in May where the stock market plummeted over 900 points in just minutes.

The charade is almost up, as the bad-but-getting-even-worse main street economy is not remotely factored in to Wall Street's casino calculations.  Truth is, most states are approaching bankruptcy, unemployment continues to worsen, and yet another major scandal is playing out with Fraudclosure Gate. Newman, the insider trading expert, says, “At the risk of sounding like a broken record, we expect a significant correction."

Unless you are an ultra-sophisticated trader with access to front-running software, it is time to follow these insiders out of the stock market and into real assets.  As the Fed announces plans for QE2, which the stock market actually views as a good thing, the elite seem to be flocking to precious metals, commodities, and large agricultural land purchases on the expectation of an even weaker dollar.  This appears to make gold, food, and oil pretty safe bets for the average bloke.

Recently by Eric Blair:
U.S. Debt Woes Expose Hidden Austerity and Looting of Public Assets
The After-the-Fed Solutions Debate Begins: Greenbackers vs. Goldbugs

This article may be re-posted in full with attribution.


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Anonymous said...

Yes, yes greedy piggie baby boomers, buy commodities, especially food, so that you can drive up the cost of day-to-day living so high that your children and grandchildren suffer even more.

Anonymous said...

OUCH! Nov. should be interesting since most people believe that an election is going to change the outcome. Voting Rep or Dem is like voting for the right hand or the left hand. They are both controlled by the same person.

Don said...

All market hysteria is ultimately a symptom of why the credit economy is so utterly immoral.

The swindlers on Wall Street make money whether they are chasing "investors" (read that suckers) in or out of the markets the Wall Street hucksters fabricate out of thin air and control as if up is down and down is up.

It is all a massive fraud and a simple swindle.

Don Robertson

Anonymous said...

"Another great evil arising from this desire to be thought rich; or rather, from the desire not to be thought poor, is the destructive thing which has been honored by the name of "speculation"; but which ought to be called Gambling."

Anonymous said...

Since the market is near an all-time high, it makes some sense market watchers would see on the high and hope for a low to come soon. Granted, insider trading seems to have something sinister attached to it, but it is not a new phenomenon. Clearly we will have a correction - likely triggered by some nonsense like the election results, but in my view it will be a short-lived dip. The thing to watch is China and its interest rate. Remember, the rich do not like to hold cash in an inflationary period, and their mattresses can only hold so much.

Anonymous said...

To the first anonymous.: What a dumbass. The author is talking about food to EAT. You think it's the boomers that are devaluing the dollar to zero? You may as well stay with CNN

Anonymous said...


You've hit the nail on the head. The illness is the financial system built on credit. It's impossible to get out from underneath it within that system because every dollar you use to try to buy down debt has debt added to it, impossible.
Everything else is just a symptom. And the symptoms will just keep getting worse until there is just a corpse left.

nader paul kucinich gravel mckinney said...

Let the criminals loot each other.

Anonymous said...

This anony agrees with the one that called the first poster a dumbass. First of all, collective characterization is called stereotyping, and is as wrong in lumping a generation as in mischaracterizing a race or ethnic group. Secondly, the internet movement of younger people describing themselves as innocent while the older generation is the cause of all evil in the world is a tactic to keep people from accurately identifying the causes of our economic problems. As gratifying as it is to blame the boomers, that generalized and misplaced anger will be very useful as the TBTFs keep their boots on our necks. Clue: the younger generations will be put through the meat-grinder just the same as we were. Put a little more thought into identifying the problems before turning us into soylent green.

Anonymous said...

"Voting Rep or Dem is like voting for the right hand or the left hand. They are both controlled by the same person."


And they are both giving us the finger.

jerry said...

Some boomers were not to smart,,major consumers..
I am a boomer.....raised in a 3 generation family house......if you are a boomer and not foolish and your grandparents had anything to do with your upbringing they ground into you being a saver....I pulled 3x what i had put into the market when The dow hit 14k...bought farm land with it.. Depression surviving grandparents were and are the biggest blessing anyone can have.
pay attention things are changing FAST .
left some in to play with and pulled again in early Oct..bought more farm land .
only have 1 debt ...wife's car...

jbpeebles said...

The focus needs to be on the the President's Working Group on the Capital Markets, the so-called Plunge Protection Team. This group meets in private; none of its minutes are made public. The PPT buys and sells massive quantities of stock to preserve the illusion that the markets are more stable than they are. At best, the PPT smoothes the abrupt market transitions. At worst, it exacerbates underlying stress by masking the true state of things.

Psychology plays a huge role in the performance of stocks. Look no farther than the dotcom bubble. When all is said to be going up, the lemmings follow. Likewise, when the market corrects, everyone heads for the gates, accelerating selling.

The closest parallel to the PPT is Japanese gov't policies which included buying bank stocks. Instead of forcing the banks to write off bad loans, the gov't provided them with the capital to preserve the status quo and avoid the damage. This unfolded like TARP, where the banking industry exerted its considerable political leverage to get gov't to bail them out.

Now we need to decipher market movements on the likelihood share prices are routinely manipulated. Insiders are likely to know the true state of their companies' finances as well.

Even if the manipulation means well it has limits, like for instance the flash crash where computer-driven programs crushed the Dow in minutes. Instead of working proactively to regulate exchange vulnerabilities, the formerly not-for-profit and now for-profit NYSE allows flash trading and other digital stock-trading manipulations to occur in massive volumes.

All these abuses amount to distrust between individual investors and the exchanges/stocks they offer. It's ironic how that distrust has morphed into individual investors selling their shares. Back in the 90's--a vast time ago in the psyche of short-term profiteers--these small investors buoyed the markets and made everyone rich. Abandoning this relationship has left the exchanges over-committed to the already rich and their electronic trading schemes. Naturally, once those people manipulate, someone else has to make sure the greed doesn't spiral out of control.

The PPT's actions are evident during any President's speeches, or during potential crises. The Prez and his minions are hyperconscious of image and index price swings are seen as political vulnerabilities and thereby fully manipulable, plus they fulfill crony capitalist goals by presenting the false image of economic stability or recovery.

Thebes said...

Well they have to do -something- with all that money injected by the Fed. You don't expect them to not make money with it, right?

So pump and dump till the carbon bubble cometh.
And don't worry after the (s)election* Obushma will sign that little notary act and fix the banksters "paperwork problems".

* (selection because it is NOT an election, we get to choose the lesser of two evils and can't even choose "none of the above" who would surely win most races)

janine said...

go to hell nwo

Anonymous said...

Oil or food what is the difference when it comes up to greed. Time to pay the piper folk no matter who you are.

Anonymous said...

I'm just amazed that there is actually anything of value left to steal.

Activist said...

There's always abundance in the world.

Chainsaw said...

So just where are these insiders PUTTING all this money they are taking out of the stock market? They sell their stock and do WHAT with it?

Anonymous said...

This main article is way off and draws correlations that, once inspected, are irrelevant.

Mrs A vd Laan-Leito said...

1 Come now, you rich, weep and howl for your miseries which are coming upon you.
2 Your riches have rotted and your garments have become moth-eaten. 3 Your g o l d and your
s i l v e r have rusted; and their rust will be a witness against you ... It is in the l a s t d a y s that you have stored up your treasure! ... 5 You have lived luxuriously on the earth and led a life of wanton pleasure; you have fattened your hearts in a day of slaughter. ... James 5:1-6 (New American Standard Bible)

What do I want to say with this biblical passage? To those who have so much, don’t let it be like this for you. Put to use what God Almighty enabled you to have in accordance to His wishes.

Anonymous said...

Crash it and let's get it over with. Then we can hunt down those responsible. The punishment must fit the crime.

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