As S&P 500 Nears Record ...
CEO Insider Sales Reach 2-Year High
How stockholders operate is good to know but don't forget the source of the money they play with. We excerpt this 2013 article from Bloomberg, Feb 21.
By Sarah PringleCorporate executives are taking advantage of near-record U.S. stock prices by selling shares in their companies at the fastest pace in two years.
There were about 12 stock-sale announcements over the past three months for every purchase by insiders, the highest ratio since January 2011.
Whenever the ratio exceeded 11 in the past, the benchmark index declined 5.9 percent on average in the next six months.
Rather than signaling the market has reached a peak, the transactions may reflect aging executives and board members seeking to lock in profits from a four-year rally before they retire.
Stock sales have been led by insiders at companies from Dollar General Corp. (DG), the largest U.S. dollar-store chain, and BlackRock Inc. (BLK), the world’s biggest money manager, who unloaded more than $5.3 billion worth of shares in each of their companies in the past year. Other big sellers were from Microsoft Corp., with $2.4 billion, and Capital One Financial Corp. (COF), with more than $3 billion in sales.
Executives at 153 companies in the S&P 500 unloaded shares between Feb. 11 and Feb. 15, with announcements of sales outnumbering buys by 17 to 1.
Insider transactions do not move markets, large inflows. Investors deposited $37 billion into equity funds in January, the most since 2004, after pulling almost $300 billion out of stock funds since the market bottomed.
The S&P 500 has rallied more than 6 percent in 2013 and this week climbed to within 2.3 percent of its record reached in October 2007. The index has more than doubled since bottoming in March 2009.
High insider-selling levels tend to occur near the end of earnings season since executives aren’t allowed to buy or sell stock ahead of announcements.
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JJS: If top dogs get stock options, why not every employee? Or, is playing the market in essence a pyramid scam? Even if not, is too much income getting concentrated at the top of companies, at the top of society? Given that the top gets paid hundreds of times more than the middle and thousands of times more than the bottom, it seems the answer is yes.
But if the top is not earning all that money, how are they getting it? What happens is: they’re given it by government. Politicians give them tax breaks and lenient enforcement of safety standards and sweetheart contracts. The state also spends money in ways that pump up land values, fatten mortgages, and give Wall Street more money to play with.
All that would come to a halt if society recovered the socially-generated values of land. Forget the taxes and subsidies. Instead, we’d all pay land dues in and get “rent” dividends back.
Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .
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