Wall Street: Still Clueless

OK, it’s official: Wall Street is still clueless as far as Main Street is concerned.

Otherwise, why would investors keep driving stocks higher in the face of the recent sharp rise in yields, which will make it that much harder for businesses to find their bearings in an already shaky economic environment?

Just as telling, why are investors buying shares in corporate America when corporate executives — the individuals on the ground who actually know what is going on — are on the other side of the trade, as the Pragmatic Capitalist reveals (below) in “Despite “Green Shoots” Insider Sales Spike”?

The latest data on insider selling shows little relief in the relentless unloading of company stock by corporate insiders.   In the last two weeks insiders sold over $335MM in stock vs listed insider purchases of just over $12MM.   As has been the trend over the course of the last few weeks the list of insider selling has been long and the amounts have been staggering.  The buy side, on the other hand, is represented by low rated, low priced stocks whose insiders rarely purchase over $500K.

One might think that with all of these “green shoots” the insiders at major U.S. corporations would begin buying up their own shares voraciously.  Especially after a nice little run like we’ve seen lately.  After all, with stocks still 35% off their highs and a full blown economic recovery (supposedly) on the horizon it would make nothing but sense than to buy your own shares, right?

Although there were signs of life in early May the overall trend in buying remains very low.  As we’ve noted before it’s not the mountain of selling that most concerns us, but the total lack of buying.  Insiders sell for many reasons, but they only buy their own stock when they are confident that the price will rise.  As of now, insider buying remains incredibly weak which is more than likely a vote of (no) confidence in future business operations.

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