Wednesday, May 6, 2009

The real economy sucks

But banks don’t.

The Pragmatic Capitalist has up his results from his study of insider buying versus selling.  Insiders are selling at a rate not seen since the top in 2007.  

Some of this selling reflects the usual diversification of some super-rich executives.  Bill Gates is the biggest seller on the list.

Some of this selling reflects the insiders looking at the abyss.  Many a CEO this cycle has been levered to their stock and many have moved rapidly from the genuinely wealthy to the ordinary no-substantial-assets masses.  

Only some of this selling reflects the economic prospects of the businesses in question.  However I think we can conclude by just how skewed the ratio is that even that sucks.

What was not noted though is that there is not a single bank executive on the list of sellers.  Not one.  

Now partly that is that the forced selling of bank stocks happened early.  But partly it has to be that the prospects for banks have improved – at least off the catastrophic situation of a few months ago.

My slogan for analysing banks is to watch what they do not what they say.  I think that is about right.


Bill Bishop said...

but aren't most of the top execs at banks that have taken govt aid barred from selling? wouldn't that skew the conclusion?

Unknown said...

Also, while they may not be selling, they certainly ain't buying either.

John Hempton said...

Actually on the list of buys is one bank. A small one that I have only looked at once and which I can't vouch for.


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