Thursday, August 13, 2009

An Avalanche of Insider Stock Selling

What's the "message" of the market here? Over the last two weeks corporate insiders have dumped over $2.1 billion in stock vs. $73.1 million in buys. I'm not sure I've ever seen the ratio of insider sells vs. buys this skewed toward officers and directors looking for the exit door. Talk about the captain jumping into the lifeboat and speeding away before the ship sinks....

Given that the trailing, "as reported" price/earnings ratio is now 144, or substantially above the peak p/e ratio on the Nasdaq at the top of the tech bubble, what is the market trying to tell us?

Think about that when you call up your financial advisor or broker and tell him you want get out of the stock market.


  1. Whenever this kind of insider selling gets attention, you get the same old excuses:
    -tax reasons for selling

    But the reality is when insiders are dumping like they are now it almost always marks a top. Great stuff.

  2. Forgot to mention this item;
    from the always fun "Mogambo Guru", a missive on why the US government has no need to confiscate your gold:

    I may post on this tonight, but a fun read.

  3. I would agree on the excuses thing except that the insider selling has been extraordinarily high every month since April. There is some merit to diversification. No merit to tax selling at this time of year.

    There's no question, especially in relation to the very small amount of buying going on, that insiders are fleeing Tokyo before King Kong crushes everything.

  4. I wanted to thank you for this interesting I definitely loved every little bit of it. I have you bookmarked your site to check out the latest stuff you post.