Fool me once, shame on you. Fool me twice, shame on me. This of course is a famous axiom that has acted as a reminder to people to always be aware when someone seeks to get you to perform an action that deep inside you know isn’t good for you.
And for eight years following the stock market crash of 2008-09, this has worked well for the retail investor who was fooled the first time in 2000 when the Dot Com bubble burst, and then a second time when they let down their guard to be a part of a stock market that grew from the artificially spun housing bubble.
But alas unlike the German people who still today remember and take cautions 80 years after the hyperinflation they experienced during the Weimar Republic, the American investor has a much shorter attention span. And with the false exuberance of the Trump election that is being coupled with stocks hitting unprecedented all-time highs, the combination of fear and greed has finally overwhelmed the retail investor and they are suddenly jumping back into stocks at a time when fundamentals are at their worst.
After years of hiding out in bonds and other safer investments, retail investors began creeping back into stock mutual funds and exchange-traded funds following the election. Investors plugged $20.7 billion into U.S. stock funds in November, the biggest month in nearly two years. They've followed that up with more purchases. That buying has helped to bid up stocks even more. – AP
Sadly however, those retail investors are once again, and for the third time in two decades, being led to the slaughter house by the ruthless commercials that have been waiting patiently for several years to find willing buyers for their own stock holdings. And sure enough, once the retail crowd suddenly took their money off the sidelines and dove into stocks, insiders are salivating as their selling of shares to these useful idiots are reaching levels not seen in the past six years.
As companies have been less willing to use cash to support share prices, corporate insiders have been selling at the fastest pace in six years. Insiders unloaded $9.9 billion ($500 million daily) in February and $9.7 billion ($450 million daily) in March, the highest monthly volumes since February 2011.
Do buying mom and pop investors know something selling corporate insiders do not? Normally, some would smile at this assumption, alas in this day and age when retail investors are increasingly becoming the "smartest" money (with hedge funds almost terminally relegated to "dumb money" status), this time may just be different. For the definitive answer check back this time next quarter. – Zerohedge
Equity markets today are more about psychology, emotion, and sentiment than they are about fundamentals and technicals, and the belief in what the Federal Reserve will do tomorrow is much more cogent to the direction of stocks than what a company’s quarterly earnings will be during a given reporting season. And since the experts on Wall Street know that mankind is a creature of habit, the patience they have shown in accumulating stocks over time when the prices were low is paying off now as they begin to sell to the very investors who said they would never get back in after being fleeced just eight years ago.