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17 November 2008

Insider Buying

Insider buying of their own shares hit $1.4 billion in October. Usually when this happens the shares of stock in those companies rise. Between 1988 and 2007 this has happened 8 times and the market rallied each time. But this time, as with the last two times in August of 2007 and March of 2008, the market declined one month after the purchases. Maybe insiders are a little over optimistic or maybe they see their companies shares as a good value, but either way the market is punishing them.

Speaking of punishing, the SEC has charged Mark Cuban with insider trading of mamma.com shares in 2004. Cuban sold 600,000 shares at that time.

In other news:

The NABE economists, 96% of them, now agree that the U.S. is in a recession with unemployment to rise in 2009 to 7.9%.

Citigroup is announced it will layoff 50,000 workers, that's down 76,000 from its peak.

Goldman Sachs announced they will forego executive bonuses. These executives have received bonuses in the tens of millions annually for years, so it's hard to feel too sorry for them. At some point you have to wonder what will I do with another 10 or 20 million. On the other hand to be fair, the costs of operating yachts and jet aircraft can be very expensive with the pilots, captains, deckhands, laborers, parts and supplies, food and don't even mention the cost of gas to get to the next hot vacation spot. Whether you feel sorry for them or not, I'm sure they won't have to worry about putting food on the table.

Credit card late payments are rising, Target's credit card late payments are rising faster than the average at 7.7%. This retailer's been in the news a little too much lately with negative news. In September and October, companies that were in the news didn't fare well.

If you are looking for a place to park some money, defensive stocks are in the healthcare and comsumer staples sectors.

Auditors are removing the "doubt" language from Las Vegas Sands audit, meaning that the audit will not contain language indicating that the Sands' operation as a going concern is in doubt. Shares of Sands rose on this news.

Auto makers have not responded well to the $25 billion offers due to the 'strings' attached. They have yet to take the money. The Senate is not likely to approve the broader bailout plan with a vote expected this week.

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