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What Do They Know That We Don’t?
Wolf Richter www.testosteronepit.com www.amazon.com/author/wolfrichter
Friday evening when no one was supposed to pay attention, Google announced that Executive Chairman Eric Schmidt would sell 3.2 million of his Google shares in 2013, 42% of the 7.6 million shares he owned at the end of last year—after having already sold 1.8 million shares in 2012. But why would he sell 5 million shares, about 53% of his holdings, with Google stock trading near its all-time high?
“Part of his long-term strategy for individual asset diversification and liquidity,” Google mollified us, according to the Wall Street Journal. Soothing words. Nothing but “a routine diversification of assets.”
Routine? He didn’t sell any in 2008 as the market was crashing. He didn’t sell at the bottom in early 2009. And he didn’t sell during the rest of 2009 as Google shares were soaring, nor in 2010, as they continued to soar. In 2011, he eased out of about 300,000 shares, a mere rounding error in his holdings. But in 2012, he opened the valves, and in 2013, he’d open the floodgates. So it’s not “routine.”
Liquidity, Google said. In 2012, he reaped about $1.2 billion from stock sales, and if he can sell this year’s portion at the current price, he’ll reap $2.5 billion. $3.7 billion in total. What exactly would he need that kind of liquidity for? He could buy a Boeing 787, if it ever becomes airworthy again, plus a few castles, dozens of handmade exotic cars.... And it would barely scratch the surface.
Diversification, Google said. Sure, don’t put all your eggs in one basket. Though he didn’t need to diversity from 2008 through 2011, he now needs to diversify urgently. The landscape has changed. And he is reacting to it.
He could diversify into treasuries, for example, which would guarantee him a loss after inflation, thanks to the Fed-imposed financial repression that governs our crazy lives. Or he could buy lots of gold or a myriad of other assets that he thinks make more sense than holding Google stock at the current price.
So, we’re left wondering if there’s something waiting to happen at Google that prescient execs with a phenomenal understanding of the company and the industry can see on the horizon. Google has plowed a lot of money into startups, green energy, and other mind-boggling projects. He might be worried that they won’t pan out, that they’ll have to be cleared off the balance sheet with a huge write-off. He might be worried about a million things.
Yet the fact that he sold practically nothing during the bull market of 2009-2011 suggests that he may see something beyond Google: the hoped for Great Rotation, for example—from those who know to those who don’t. From the Eric Schmidts to mom-and-pop retail investors. And once that’s accomplished....
Small investors lost a bundle in the last crash. At the end of their wits, they got out at the bottom, and stayed out during the subsequent run-up. But now, they’ve been driven to desperation by the Fed’s zero-interest-rate policy, as inflation has hammered their CDs that yield almost nothing. In order to stop losing money slowly but surely, they’re jumping into the stock market once again, buying the very shares Schmidt is selling—or so the smart money hopes—only to face once again the risk of losing a lot of money fast.
That was the Fed’s policy every time. They didn’t care in 2000 that the market demolished a bunch of young upstarts that had gotten unjustifiably and unnecessarily rich. Let them crash. They did it again during the financial crisis. Let them crash. Only when it started taking down their cronies, did they get nervous—and handed them trillions.
Mr. Schmidt isn’t alone. Corporate insiders were “aggressively selling their shares,” reported Mark Hulbert. And they were doing so “at an alarming pace.” The buy sell-to-buy ratio had risen to 9.2-to-1; insiders had sold over 9 times as many shares as they’d bought. They’d been aggressive sellers for weeks. That they dumped shares in December, when the sell-to-buy ratio was 8.38-to-1, could have been the result of the fiscal-cliff theatrics, but the latest sell-to-buy ratio was even worse.
Instantly, soothing voices were heard: “don’t be alarmed,” they said. But Mr. Schmidt and his colleagues at the top of corporate America, multi-billionaires many of them, are immensely well connected, not only to each other but also to the Fed, whose twelve regional Federal Reserve Banks they own and control.
For the mere public, there have been vague and mixed signals that the Fed might finally stop its drunken printing frenzy—that the only thing it is waiting for is the completion of the Great Rotation of equities from the smart money to mom-and-pop money. Once that’s completed, to heck with the markets. But for Mr. Schmidt and his buddies, the signals might not have been vague and mixed, but clear and actionable.
At the other end of the income spectrum: with the average cost of attending college at $120,000, a family of four should expect their children’s college to cost more than a home. Optimism about the value of education provided justification for students to borrow $42 billion from the US this year. Yet many of them will end up as student-loan debt slaves. Read.... College Graduates Are The New Debt Slaves.
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reason for selling : in case of any major trade and / or military conflict internet will be plugged off ... and google's then worth a shit
military/cia coontrol google now allowed him to cash out. google will be there especialy during and even more so for future military conflicts. google and facebook are new tools for creating "friendlies" or westernized thinking peoples.
Sarc on: But I thought that CEO's and the Fed had my best interests in mind/ off
I'd say that Mr. Schmidt will probably buy his own country, the Bahamas, or the U.S. Central Plains.
Why not have your own fiefdom?
Or follow President Bush to South America..(Southern Hemisphere expected to stay relatively free of nuclear fall-out..)
No, not really. The radiation circles the globe every 40 days. The planet's biosphere - north and south - is totally soaked in it:
http://enenews.com/scientists-tracking-fukushima-release-question-why-ra...
come on who needs a nuke when you can blow your ennemy's economy ? shall you really want to use a nuke, you'll probably use it as an EMP, a lot faster, "human" and global
OR buy his way into one of the Deep Underground Mil Bases (DUMB) before Nibiru gets here?
http://www.youtube.com/watch?v=NFzvrCa-j10
http://www.youtube.com/watch?feature=endscreen&v=D7tPoipIeyk&NR=1
He is The Great Rotation.
(Maybe wanna double check that with Mandy Bigtits....)
With the radiation from Fukushima killing off Japan, and the US within a couple of years, and the high probability of a worldwide EMP from the solar storms this year - which would within a week cause every nuclear power plant to explode into full meltdown - why wouldn't the smart ones cash out and really enjoy their lives?
What are you going to do?
Your dead on, also he is selling because he and others are trying to get their money out and out the door before every body figure out that the economy is done.
Or before capital gains are taxed at full income rates, or something similar.
Well, for starters, I would quit reading whatever bogus websites you are getting that kind of crap from! How can a solar storm cause reactors to melt down?
Solar EMP does not so much affect electronics - it's too slow in terms of rise time. Rather it affects large extended structures like power transmission lines, burning out transformers, etc. Repair time in a large scale storm could extend into months and years as transformers have to be custom built. Most nuclear reactors only have a couple of weeks of back up power. After that, cooling is lost and the reactor can melt down. Straightforward science/ engineering. Major scientific bodies in the U.S. and elsewhere have warned of this and other dangers (e.g. Inability to pump water into towers, social breakdown, etc.
yeah and i believe we have been smart enought to secure our nuclear plant's electronics in a faraday cage ...
BWAHAHAHA!!!
'
Solar storms could unleash massive nuclear reactor failures in UShttp://mgx.com/blogs/2011/03/29/solar-storms-could-unleash-massive-nucle...
Japan's Nuclear Disaster Could Happen Globally, NASA warnshttps://www.youtube.com/watch?v=BpI-m62q_Os
"Experts on a panel assembled by Florida-based The United West have warned that the aftermath of an EMP (Electromagnetic Pulse) attack would be devastating on the United States, with up to 90 percent of the population dead or dying."
http://www.wnd.com/2012/08/whom-will-you-call-when-emp-shuts-down-u-s/
Good to make the distinction: EMP from nuclear weapons (and probably from EMP non-nuclear weapons) have fast rise times and destroy all sorts of electronics. Essentially, nothing would work afterwards. Solar EMP mainly knocks out power lines and transformers.
Electronics won't work without powerlines and transformers.
Reactor cores and fuel element cooling ponds need constant water circulation, or the water boils off. Once there is no outside power imput, and then the emergency diesel pumps run out of fuel, your meltdown is guaranteed. That's the connection. All the nuke plants are ticking dirty Fukubombs.
This isn't relevant once the control rods are inserted and the neutron multiplcation and fission stops (takes just a few minutes to hours). Then you would only have to dissipate the heat using the passive cooling systems most of which are gravity fed (unlike in Japan). There's also plenty of stand-alone pump power to dissipate the power during the cooling which only requires a few days-thank goodness for the huge heat capacity of water. The time scale is what matters. However, the voltage surge experienced in transformers would take them out unless the grid could be shut down a q few minutes (the time scale for knowlege of a CME) eliminating all distributed power sytems as mentioned. Rebuilding could take many months.
The main issue with coronal mass ejection in the modern electrified age is that both power and communication grids would be inooperative for months. There would be mass starvation, medical issues etc. which vastly exceeds unlikely thermal core runaway in a nuculear plant. Stock up on fossil fuel and your own generator if you want any electricity in the meantime.
The spent fuel ponds are packed so tight due to the long term storage not being built. The pumps must never stop or the water will start to boil off. There is far, far more waste in the spent fuel ponds then in the reactors themselves.
I don't see why communications would be so badly affected; at least the fibre optic backbones should work, and fibre to the premises, as long as you have power supply for the hardware. The antiquated power grid with lack of spare parts is the big issue, as far as I can tell.
"...which vastly exceeds unlikely thermal core runaway in a nuculear plant."
It doesn't take much to melt an NPP:
https://en.wikipedia.org/wiki/Nuclear_meltdown
Just like they're trying to stop right now with the Pilgrim NPP outside Boston:
http://enenews.com/ap-pilgrim-nuclear-plant-loses-power-again-running-on...
'
'Report of the Commission to Assess the Threat to the United States from Electromagnetic Pulse (EMP) Attack' http://empcommission.org/docs/empc_exec_rpt.pdfOh, the prophets of doom
will always find room
in a world full of worry and fear,
tip cigarettes, chemistry sets
and Rudolph the red-nosed reindeer.
So I'm going back
to my little old shack
and drink me a bottle of wine
that was mis en bouteille
before my birthday
and have me a fugging good time
Picked a helluva time to stop sniffing glue...
Picked a helluva time to stop shooting cops...
Buy some lead foil
If you are concerned about an EMP you might want to look into copper wire netting rather than lead foil.
He's also concerned with meltdowns...But in that scenario, what good does fiat moeny do (or anything else)? We'll all be fried, no?
Thanks for the tip, Test..., perhaps a tradeable top is forming now.
I hope that coronal mass ejection comes our way soon..
My summer color is just about gone.
Chuckle... "Buy a Boeing 787" that you can't fly without permission.
and I have colon mass ejection every morning.