This page has been archived and commenting is disabled.
The Nasdaq Has Become The Biggest Circle-Jerk In History
In the aftermath of Marc Cuban's oped from two days ago, that the current, second tech bubble is worse than the first dot com bubble of 2000, there has been much anguish by those deeply invested (on margin) in (bio)tech stocks, to demonstrate that the Nasdaq at 5000, or Biotechs trading at 50x or 5000xP/E, is perfectly normal and the global central banks' $13 trillion in liquidity has nothing to do with it. Of course, the answer who is right and wrong on this issue will not be revealed until after the current bubble pops.
Luckily, there are some very clear clues.
As Sundial Capital's Jason Goepfert notes, the best way to figure out whether tech stocks are overvalued is to look what the insiders are doing: those public tech company directors and senior executives who know their companies better than anyone, and who may keep silent as the Nasdaq crosses 5000, but are quite vocal with their shares.
According to MarketWatch, Goepfert said insider selling by tech execs is now at the heaviest pace seen in at least eight years.
Then again, we have seen record insider selling before: surely that can't be the punchline.
It isn't. According to Goepfert, as well as to Zero Hedge which first revealed that companies had announced a record amount of stock buybacks in February, the punchline is that these tech insiders are selling a record amount of personal stock... to the very companies they control!
Per Sundial, technology companies have been buying back a record amount of their own shares. And who is selling: why the management teams and directors that make the decision whether to allow the company to buyback stock in the open market.
“It seems odd that insiders would be selling their stock at the very time they’re directing their company to buy back that very same stock,” Goepfert said, adding that "it’s a better sign for stocks when insiders are buying, or at least not selling heavily,” Goepfert said. “When they do sell en masse, it’s a yellow flag.”
We would be less politically correct: when the same management teams that sell record amounts of their own company stock to the companies they control - companies which are now buying back record amounts of stock, this is not only the worst possible conflict of interest, it means, for lack of a better word, that the Nasdaq, bubble or not, has become the biggest circle jerk in history!
A circle-jerk which will continue until the Nasdaq itself, with its trademark zero cashflows, ends up as loaded up with debt as any mature, late cycle company. Because by now it is clear to everyone that if and when rates do rise, and all that all time high corporate, financial, household and sovereign debt has to be services, nobody is getting out alive.
»
- 19949 reads
- Printer-friendly version
- Send to friend
- advertisements -
"February set a new record for share buybacks. US corporations spent a staggering $5 billion a day on their own shares. That brings the tally to $2 trillion since the bottom in US stocks in 2009 – or about 10% of the total value of the S&P 500."
Just shut up and BTFD!
Yeah that's what EVERYONE is sayin' now........hehehehehe......everyone
"Now is a great time to buy AND sell stock."
[At least for corporate insiders...]
“It seems odd that insiders would be selling their stock at the very time they’re directing their company to buy back that very same stock...”
Very odd.
Yeah, odd like that uncle who always wants you to pull his finger.
In general, the corporation financing their share buyback is a recipe for Debt Jubilee.
Small fries 401K's will be liquidated before the jubilee.
"The Nasdaq has become the biggest circle-jerk in history".
Except for:
The War on Terror
The War on Drugs
The Military-Industrial Complex
The F-35
The Wall Street to regulators to cabinet position to Wall Street merry-go-round
Congress
The American Dream
The Israeli-Palestinian "Peace Process"
Iran Contra
NATO
Congress's annual Farm Bill
Truth in advertising
The MSM
SCOTUS
POTUS
NSA
CIA
AIPAC
TARP
GATT and WTO
TPP
TTIP
The "US" Federal Reserve
and best of all, QE.
For all the hate about share buybacks, it's actually an open opportunity to take part in the looting of corporations. You can take their profits this way, and they don't care because they're just "person slaves" of management.
Except you're playing musical chairs waiting for the music to stop. The guys in the Big Club have the few open seats reserved.
The guys at the top get the nod about half a second before the music stops.
The overlords manipulate us into combining our production for their good.
The so-called ‘debt’ is only a mental construct. This mental construct is what keeps us on these wheels day long everyday. LOL
The big problem is that those who see it are swamped by a sea of those that don't.
It's really hard work swimming against the tide.
The mental construct of the vast majority is very real to those who see through the bullshit.
As a wise person has said: "It is hard to soar like the eagles when you are surrounded by turkeys."
Half a second?
More like a year at least!
But, everyone swore up and down they learned their lesson last time and behave responsibly if the Fed rescued them....aw guess it was just horseshit the whole time after all.
I like the commenters who roar "MOAR!" ...As long as there is a barrel of green ink and a ream of paper left in the FED's warehouse the show seems to go on.
wow is this going to end ugly....you look at most companies even Apple....revenue & income falls and only thing increase EPS are share repurchase....which when they stop....is going to be death
CONflict of interest = can't lose, ever
What about RUT? Most shorted ~pump&dump?
These articles would have so much more meaning with some simple statistical analysis.
Read the charts. The (UP) AXIS from left to right over the last 6-7 years, is the reason you're asking the question?
Buy eur/usd. (small spot position). ;-)
I like the snake eating itself, Ouroboros. He is swelling at first because he is eating himself (the bubble). Then he is digesting himself (the pop) and he is much more crippled than when he started. If he keeps doing it without new inputs to the system, he dies.
About covers it for this economy. You would would need Liesman with a mike announcing that the snake is in recovery and actually still growing. Krugman would tell you that the snake destroying itself is good for snake growth.
Okay, I've been up from 1-3 GMT-7 .
I'm going to take a nap.
And snake oil is flying everywhere!
Odd, but makes perfect sense.
If you knew, based on IQ tests, you were dumb, then it'd be 'smart' to sell yourself some swampland, in order to profit from your own stupidity.
I'm as retarded as a "bag-O-rocks".
I like that 2min chart idea. I like 3min charts. 1-3-5. Makes sense, like condensing 4HR charts to 8-hours. 8x3=24
Not so, dumb folks can't comprehend currencies.
Anyway, I actually don't trade from 2m signals, for RUT the 2m seems the canvas for algo fake-outs, but I still keep up a 2m chart purely to look for big spikes.
How many oscillator's do you use on a specific chart?
Currency traders are ANAL. We watch everything.
Don't know if you read my "Kodachrome" song parody re: FreeStockCharts, but I swear that's my main charting platform, even though it's just BATS, I trade things w/ 7-20 million shares a day, so it matches consolidated bars precisely. However, for stocks, I found you can't use any particular oscillator, instead markets trade fractally, not in the math sense of the word (though some would claim this), but in the "self similarity at increasing magnification" idea from Chaos theory, 80s Mandelbrot Set diagrams, etc. So, they're bouncing the same way on the daily chart down to the 2-min chart, so the main decision is whether to trade turns based on shorter charts, or if the move will go all the way to a longer chart's limits, as we saw today. Not sure this applies to currencies, but convinced this is the key to the universe, and takes only 3 yrs at 10 hrs/day to figure out, unique for each asset and index, I believe.
8x3 = London.New York.Sydney
...and the American people are the soggy muffin.
Seems like a good case for breach of fiduciary duty lawsuits. Release the sharks!
Human centipede bitchez.
https://en.wikipedia.org/wiki/The_Human_Centipede_%28First_Sequence%29
How's my ass taste?
http://www.slashfilm.com/barf-city-clip-from-the-human-centipede-one-of-...
and the taxpayer is the bukkake recipient
"Yellow Flag" my ass!
Company directors have no influence what... so... ever... on increased company performance
In fact it is more probable that they have a negative influence because they are the main beneficiaries of mergers, acquisitions cos they get to grab a bigger salary as a result
Eat..poop.
Eat the poop.
Poop again and eat THAT poop. Got it!
As the Tyler's already pointed out, these are effectively LBO deals where the company gets put a debt to buy out the shareholders. In the extreme of the thought experiment, the company simply goes private.
Interesting times indeed.
I ain't paying anybody anything. They should know better than to lend someone from another universe money.
fiat {
Income tax -> International Rothschild's Serf fund -> another universe -> IMF
Utility taxes -> pawed by CFR -> another universe -> IMF
Sales tax, license fees -> The Pit -> another universe -> IMF
Alimony, all court fines & fees, bribes involving kick up, campaign contibutions, BAR fines, prison guard union dues -> Puerto Rico -> another universe -> IMF
}
Precious metals and critical masses of materiel {}
If it bleeds every 30 days and does not die...
this reminds me about what fun it is to just shake ones head when reading the raw data at http://insidertrading.org/
fun game to play is BCDHW (boats cars drugs homes whores), which is similar to the BCDHO (bird cat dog human other) game you play with feces on the street in big cities, where you speculate what the money is going to be used for.
I've often remarked that share buybacks are inherently bad for business, but the recent spate will prove to be an outright disaster.
Consider:
Since money is essentially free to many of the big corps, they borrow it to buy back their own shares.
Shares, due to the increased demand, caused by themselves, rise in price. They are buying overpriced shares.
When rates go up and they have to roll their debt, they won't have enough money to do so without... ta da! Selling shares at
TA DA! LOWER PRICES!
EPS is then crushed. Profits decimated, stock price craters, the company is destroyed.
Now we see why everybody on Wall Street is afraid of rising interest rates.
It's not only the end of the "punch bowl," it's the END OF TIME. (although, some may say, the execs who sold all their stocks at ATHs will rush in to buy up the shares on the cheap, becoming de facto majority owners. But, will they? Would you?)
Very sketchy, indeed.
Another "circle-jerk" or the ouroboros of incorporated robbery, which is even greater, is explained in the links below, about how government mandated organizations now own the vast majority of the shares of corporations. Not only is there a revolving door between the people working for the big corporations and governments, various entities which have the power of government have bought up the overwhelming vast majority of the ownership of publicly traded corporations.
It is mind-boggling to attempt to imagine the degree to which everything eats everything else, while professional money managers tend to follow each other around inside of that ouroboros of incorporated robberies, doing their kinds of circle-jerks, while collectively believing in bullshit ideologies that deliberately blind them to perceiving the degree to which the real social facts have become extremely paradoxical!
Walter Burien, Clint Richardson and Jerry Day: these were NOT well-made, entertaining videos, however, the concepts revealed are IMPORTANT:http://www.cafr1.com/
I call that: Ouroboros of Incorporated Robbery!
http://www.youtube.com/watch?v=bn3hUcmNDdA
Ending Taxation - The Only Game in Town - 2011
http://www.youtube.com/watch?v=QkfMuvVuETQ
The Corporation Nation Master (2010)
http://www.youtube.com/watch?v=fhkWueEjewM
Corporation Nation 2
Another, shorter, talking head video about the CAFR:
http://www.youtube.com/watch?v=T2aif0Wk9E0
Introduction to the CAFR - Why You Can’t Get Ahead
The FED+Treasury has been doing the same for years. Treasury issues debt. Dealers buy it. Dealers sell it to FED. Interest paid to FED is declared as income to the Government. TREASury issues more debt.
Corporations issue stock and give some of it to the management. Management sells stock to the Corporation. Oftentimes the Corporation issues more stock to the management. Sometimes it doesn't. Sometimes the corporation replaces the stock with debt.
This is "The New Normal".
I would like to see a debt to equity Ratio Chart.
When interest rates finally do rise these companies are in deep shit