This is hard to understand, as we have parchment paper thin walls in today's world. Information is about as easy to come by as fried chicken gizzards on the streets of Beijing. Unfortunately, knowing the quality of that information is about as reliable as knowing the quality of your fried gizzards...
INSIDER SELLING DUMP CONTINUES: I have mentioned the site http://www.j3sg.com/ in a previous post, but I highly recommend joinging for daily email updates. Today's insider selling was manic in comparison to the buying. This is pathetic at best when the 24 year-old actress/bathing suit model/Bieber dance extra/analyst 'guest' on Forbes/Cavuto/Beck this weekend told everyone that stocks were going to double in a week after she shook her magic 8-ball in front of the camera.
Here is the Buying: Pac Sun making a big splash! They must have watched Forbes! That or 14 year-old girls are buying bathing suits (Mind out of the gutter people...).
And the Selling...
That's right-- those top nine sells are 8 digit numbers-- Just Like Jay-Z's yearly salary. Those are 8 digit numbers before the decimal point and all these sells happened today.
If you are investing in stocks wouldn't you be suspect of a few but-zillion dollars of funny money being pulled out of the market daily when you are about to invest your life savings in sliver index funds, Priceline.com and Netflix... Here that little voice in your head: '...Must listen to Cramer...' You need to tell that little voice to STFU and look at the data!
Getting hit in the face by a bowling ball... twice
I grew up in a small community that had one bowling alley. I happened to be in the same class as the guy who's dad owned the establishment. The family would have all the kids from his class over a few times a year and let us loose on the lanes. While I cannot recall a single frame bowled, I can recall the story of the ball return.
For non-bowlers out there (or anyone who has only gone bowling on their i-phone) the ball return takes the bowling ball after it strikes the pins and sends it back to the bowler at the head of the lane. Simple really.
The story goes like this: A kid was bowling with his family one day. It was not the family's first time bowling, nor was it the kids. On this fine day however, this kid (probably a snot faced husky boy) decided to stick his face in the ball return. His parents, knowing their kid understood the basic mechanics of the ball return, didn't say anything. Well, the kid had his face in the machine and a freekin' bowling ball was shot down the luge and popped him in the face, breaking his nose.
The kicker to the story is that the kid didn't fully pull his head out when the ball slammed him in the face. Instead, he tightened his grip on the outside of the ball return, probably in shock, and pulled his head out about six inches. The same bowling ball fell back a bit in the ball return, but soon got back on the track and shot out of the ball return, slamming the kid in the face... again. This time the old snot face fell backwards and went down for the count. All in, the kid had a fractured cheek bone, a broken nose, two black eyes and the reputation as the single stupidest kid to ever enter a bowling alley.
How does this story relate to today's financial markets? Simple really-- Sometimes you have to be hit hard twice before you learn your lesson. Investors were popped pretty hard in the face in 2008, but many still have their faces in the ball return holding on for more. It is not different this time. In 2007 the DOW was going to 18,000 before a correction. This year it is the same mumbo-jumbo about seeing 20-30% returns... again.
Insider trading gives us an opportunity to really look at what is going in the financial minds of many corporate executives and major investors. It may not be a 'sure thing' like the advice you get from your brother who bought XYZ stock due to a tip in a biker bar in 2009, nor is there a guarantee that it will give you the 'upside potential of the century' as stated by the CNBC analyst that has to disclose that no one in 500 sq. miles of his house owns the security he is pimping.
Insider trading gives you a chance to logically pull your head out of the ball return before the same ball breaks your cheek bone. Sometimes leaving the bowling alley with only a broken nose and a black eye is a victory!
Insider selling has been manic over the last few weeks. There is no reason to believe that everyone is buying stocks when CEO's of companies are cashing out 10X their yearly salary on a weekly basis.
Maybe Pac Sun has some magic board shorts that sing Katy Perry songs? Maybe the buying today by Pac Sun makes about as much sense as a donkey begging for waffles...
Use only the best tools at your disposal to see through the parchment paper thin walls!
And don't feed that donkey!