One More Time - Insider Selling Is Not Representative Of Smart Money Or The Future Direction Of Equities
At the risk of beating this topic to death, I'm going to beat it one more time. Many are again citing insider selling in corporations as some indication of future doom for equities. This is based on a deluded premise that insiders actually are smart money. That is absolutely ridiculous and we have addressed this specific dynamic countless times. And via many ancillary posts such as CEO surveys, insider buying before the collapse, the post on "The Game" a year before the market collapsed, etc. Insiders have been selling throughout this entire rally. The biggest rally since dinosaurs. How's that working for you as a timing tool?
The same raw data for trading or investing or economics is available to every single person on earth. At least in raw form. That a handful of outsiders called some portion or all of this crisis in advance can only be explained by the lack of understanding of reality within the financial and economics professional. That includes corporate insiders who were all caught completely off guard. Yet now we are to view those same insiders as prescient of the future? The same people who are now 90% bullish in business confidence surveys? Completely absurd. The countless billions and billions of dollars spent building a Frankenstein economy by the status quo or more accurately described as the mob was and is based on a complete economic lie. (I use mob in the context of a band of roving thoughtless idiots as opposed to criminal organization. And a band of roving thoughtless idiots are exactly who have been running our financial system and our economic policy for decades.)
What insider selling does tell us has nothing to do with equity markets in the spirit in which it is presented. It tells us what we have said repeatedly. That is, the people who bought into the financialization of the American economy, those who were most successful at taking advantage of it, are unwinding as we anticipated they would. Corporate insiders are selling in order to raise liquidity. That has numerous implications, all of which we have discussed. One, aspirational consumer products are going to be very hard hit. Two, the most wealthy Americans are forcibly joining the real economy. One that has been thrust upon the majority of Americans for decades. Three, there is no new wealth being created to drive asset prices or financial markets when government provided stimulus runs its course in financial assets. Four, insiders will be selling well after financial market bottom and it is thus completely worthless for any type of reasoned analysis on the future of equities. It is important to view the data in a context of accuracy as opposed to ill-reasoned hooey.
We have written on here numerous times that the average American has not been a big player in the stock market since the post 2000 crash. And that this market is a professional market driven by professionals. And the prime mover in the buoyancy of financial markets is the very fact that financial firms don't need main street to participate as long as they have our deposits. Wall Street has created their own ability to play the financial market game via leverage and the creation of oodles of levered derivatives. Now that the investor class is joining main street in the real economy, the only players left to participate in financial markets are hedge funds and Wall Street firms batting their Frankenstein financial instruments back and forth. A recipe for eventual disaster of this monstrosity.
Frankenstein finance lives. For now. But just as in the story of Frankenstein where attempts at playing God with dead flesh didn't last, Wall Street's attempts to become the economy will have the exact same outcome. A self-fulfilling prophecy of karma. Corporate insiders were those most duped by this monstrosity. That's a far cry from the fallacy that they are smart money.
The same raw data for trading or investing or economics is available to every single person on earth. At least in raw form. That a handful of outsiders called some portion or all of this crisis in advance can only be explained by the lack of understanding of reality within the financial and economics professional. That includes corporate insiders who were all caught completely off guard. Yet now we are to view those same insiders as prescient of the future? The same people who are now 90% bullish in business confidence surveys? Completely absurd. The countless billions and billions of dollars spent building a Frankenstein economy by the status quo or more accurately described as the mob was and is based on a complete economic lie. (I use mob in the context of a band of roving thoughtless idiots as opposed to criminal organization. And a band of roving thoughtless idiots are exactly who have been running our financial system and our economic policy for decades.)
What insider selling does tell us has nothing to do with equity markets in the spirit in which it is presented. It tells us what we have said repeatedly. That is, the people who bought into the financialization of the American economy, those who were most successful at taking advantage of it, are unwinding as we anticipated they would. Corporate insiders are selling in order to raise liquidity. That has numerous implications, all of which we have discussed. One, aspirational consumer products are going to be very hard hit. Two, the most wealthy Americans are forcibly joining the real economy. One that has been thrust upon the majority of Americans for decades. Three, there is no new wealth being created to drive asset prices or financial markets when government provided stimulus runs its course in financial assets. Four, insiders will be selling well after financial market bottom and it is thus completely worthless for any type of reasoned analysis on the future of equities. It is important to view the data in a context of accuracy as opposed to ill-reasoned hooey.
We have written on here numerous times that the average American has not been a big player in the stock market since the post 2000 crash. And that this market is a professional market driven by professionals. And the prime mover in the buoyancy of financial markets is the very fact that financial firms don't need main street to participate as long as they have our deposits. Wall Street has created their own ability to play the financial market game via leverage and the creation of oodles of levered derivatives. Now that the investor class is joining main street in the real economy, the only players left to participate in financial markets are hedge funds and Wall Street firms batting their Frankenstein financial instruments back and forth. A recipe for eventual disaster of this monstrosity.
Frankenstein finance lives. For now. But just as in the story of Frankenstein where attempts at playing God with dead flesh didn't last, Wall Street's attempts to become the economy will have the exact same outcome. A self-fulfilling prophecy of karma. Corporate insiders were those most duped by this monstrosity. That's a far cry from the fallacy that they are smart money.
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