I’ve spent the last two days going over cluster insider selling reports from the Washington Service. It’s generally agreed that insider selling is not as useful in predicting stock prices as buying but cluster selling does have some onerous implications. If the consensus opinion at a company is that management wants to lighten up, then you have to ask yourself why you are plunking down your hard earned money on their stock.
There’s an obscene amount of insider selling going on right now. I guess I say obscene because I wish I had Peter Thiel’s $450 million dollars worth of Facebook stock to unload. Speaking of obscene, Morgan Stanley’s absolute pillaging of the public with their shameless Facebook IPO will go down in history as the biggest fleecing of all time. I hope Morgan Stanley gets sued out of business from this as they don’t deserve to exist after this one.
Now that I’ve got that off my chest, let’s just say there are a lot of candidates to further research for shorts if you believe cluster selling is useful. But at even a 3% 10 yr. Treasury most of the stock they are unloading is still fairly valued or undervalued. That’s the perverse Alice in Wonderland nature of this market. As long as we are just a few headlines away from Armegeddon, interest rates are going to stay low and most stocks will look cheap by comparison. So in the world of Wonderland, bad news is good news as long as it keeps the long bond under two.