I’ve been holding on to this, But the Jan 1 to present market upswing might end today so I’ll post it real quick
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Right now, retail traders are buying,
and corporate insiders are selling.
It’s calm and orderly, but it is absolutely what is happening.
I trust I don’t need to explain what this means.
Retail investors are buying.
Corporate insiders are selling
Corporate insiders are selling
Corporate Insiders…?
You mean Congress?
LOL well maybe them to.
But the corporate insiders that are measured and reported are the
corporate execs and corporate board members.
They are selling. It’s almost like they know something
Retail, OTOH is buying.
It’s almost like somebody is selling them a rosey scenario and they are believing it.
Insiders are selling,
while retail investors are pouring records amont IN to the stock market.
Can anyone explain this to me?
Actually I’m a financial ID10T. Could you explain this?
Could increased buying by retailers be indicative of increased savings in retirement vehicles like 401Ks?
WW
I assume you are asking for an explanation of
“Corporate insiders are selling stock … retail traders are buying” (not the part about US market dominance."
In simplest terms it means
“A bear market is coming. The smart money, people with inside knowledge about their own companies are moving their investments away from stocks and into other assets like cash and bonds.”
Yes I was. Thank you.
You talking to a guy whose 401K investment is based on time horizon and not fund selection. I let the professionals manage the money.
(Because we will have multiple revenue streams in retirement, I’ve actually set my 401K time horizon to 10 years later so that a slightly more aggressive position is maintained. I’m just reaching the point where the investment ratios are starting to move.)
WW
Not everyone likes to switch in and out of stocks.
A lot of people can honestly say “I am best off in a broad index and if I get into that habit then . . . . (something bad).”
They are probably correct. They know their own situation better than I do, that’s for sure, and I mean that sincerely
The only distasteful or worrisome advice I would give such a person is that
People may “think” they are in a broad market index (like S&P or NASDAQ) but find
Probably moving to cash/ultra short term positions. The yield curve is inverted right now and with more rate hikes coming mid to long term bonds are going to take a bath in the near term.
One has to wonder just what amount of the retail positions are in managed accounts, with the major houses selling their internal positions to their managed customers.
Yes
Investors (correctly) believe that the Fed is not done hiking rates so they don’t want to buy bonds.
Why invest $100 at 4% today if you know you can get 6% by waiting until next week? Muhc better to wait a week (at 0%) and then get invest at the higher rate when it comes.
Right now it makes sense to use short duration debt for the cash position. And I wouldn’t be in a Bond mutual fund, other than a money market, or ultra short term fund.
I fully anticipate we are at the beginning of another “Lost Decade.”
We call them “decades” but that is a term of convenience. They usually last 12-18 years.
If so, any money currently in the stock market as a long term investment will break-even over the next 12-18 years all the while losing 2-3% to inflation. That is 20-30% net loss.
Q. Why not sell everything and put one’s entire into bonds right now?
A. That is not a terrible idea, but it is kind of like musical chairs. Right now the 10-year pays 4%. Wait a little bit and it will pay 6%.
That is the game the pros are playing right now.
Most people, including brokers, don’t understand bonds well enough to trade them.
Right, and the bond market fluctuates so much I don’t recommend trading them.
But a 4% bond will always pay 4%
and a 6% bond will always py 6%
That does not change.
Invest in them like CDs (which are a close cousin)
Invest with the idea “I plan to hold this for the duration and make 4%. If I sell it early I might take a penalty for early withdrawal.”
To trade bonds you have to understand face value, par, yield, coupon, duration and mark to market.
Ma & Pa bond investors can operate safely knowing only
“This bond will pay me 4% per year for 10 years. No matter what happens in the bond market that remains true. The only thing that changes is what happens if I try to cash out early.”
It really is just that simple. Bonds are just tax-free CDs. Nothing more nothing less.
Bond traders are all about “what happens if I cash out early.”
That’s where all the lingo comes in. They are all about selling and re-selling the “cashed in early” bonds.
Municipals are tax free, but I wouldn’t really call any bond a CD. CDs are bank products. There are only a few investment houses offering a fixed duration cash value certificate as an investment vehicle. Most of the big firms don’t like the reserve requirements of a non-bank cash value certificate.
The big problem for many people is they don’t understand mark to market requirements. You can tell them till you are blue in the face how hold to maturity works, but in a rising rate environment that quarterly statement keeps telling them that their current value of their bond (if they were to sell it today) has decreased. It has a lot to do with too many people’s inability to comprehend that they don’t have money in their investment account. They have securities, including the sweep account, and that balance number, in the bold larger font, is just an approximation of what they would have received, had they sold before close on the date of the statement.
I don’t think most people have a problem with that
“Substantial penalty for early withdrawal” is sufficient for most people, even most grandmas.
Now, if grandma wants to buy on Monday because she thinks the market is in for surprise when the FOMC minutes come out on Tuesday . . . then she had better understand the lingo.
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btw I am told this ad is from 1980 and that the S&P rose 32.42% that year.
I remember those times. If you check out the Fed Funds rate for that era, it got up above 17%, with all corresponding yields on new issues well above that. It also triggered massive losses in the bond markets for those forced to sell existing holdings bought at a significantly lower coupon. And while you can tell people all sorts of parables, that bold mark to market expression of current value on their statement often triggers fear.
