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Mix-Ansicht- Der neue Cross-Currents (schon vom 3.3.) - JÜKÜ, 12.03.2002, 18:21
Der neue Cross-Currents (schon vom 3.3.)
The Inside Truth CHART DATA AS OF MARCH 3, 2002
A SPECIAL REPORT BY ALAN M. NEWMAN, EDITOR
HD BROUS & CO., Inc.'s CROSSCURRENTS
The most disheartening factors concerning the end of the stock market mania have been the many recent confirmations that the mania was just not possible without concerted efforts by key participants to coerce small investors by any means possible, including malfeasance, conflicts of interest and even outright frauds. As in the South Sea Bubble and other manias, a repeat of history. We maintain our position that Enron represents a watershed event, the only possible"new paradigm" that could have come out of the insanity that drove prices to levels that discounted impossible rates of economic and corporate growth. The new paradigm and new economy that professionals touted never was. And as we have shown in our newsletter commentary and charts in recent months and show again a few paragraphs below, investors have not benefited from participating in the mania. Question: who did benefit? Answer: the large Wall Street firms that pushed high flying stocks and initial public offerings at prices that defied reason, the analysts who parlayed their supposed skills into investment banking relationships that presented the worst conflicts of interest, and especially the insiders of some publicly traded companies that abandoned fair play in the quest to engineer earnings in order sell their own inflated shares acquired via options. The inside truth is that insiders have been selling shares at a pace that eclipses their purchases by a factor of more than 100!
This mania can only end the way all prior manias have ended - with public distrust of the very professionals that coerced them into the madness the first place.
Human nature is what it is and allows history to repeat.
We are still awaiting the final GDP figures for the 4th quarter of 2001, but our latest estimate for Dollar Trading Volume represents a rather sharp drawdown from the peak of 322.4% in 2000. Our best judgment is that 2001 ended with DTV at"only" 218.1%. As a reminder, even in the insanity of 1929, DTV was substantially lower, at 133%. Does this mean the mania is totally at an end? Given the crisis in confidence, it certainly appears that the mania has been mortally wounded. However, we must still bear in mind that even our initial estimate for 2002 finds investors trading $1.95 for every dollar generated in GDP. Thus, stocks are still the most important facet of the economy and because they are, the crisis in confidence is far more important than the financial industry believes and the crisis has the power to completely unwind investor trust, much as it did after the debacle in 1929.
Reality represents an assault of sobriety and reality is only slowly setting in.
Two year wealth losses continue to be highly significant and are second only to the massive losses incurred after the 1929 crash. Clearly, wealth losses were at least partially responsible for the economic depression that followed in the early-1930's. That current wealth losses are not a major consideration in the prognostications of economists and strategists is likely a manifestation of complacency at best and utter ignorance at worst. Total stock market capitalization has declined by at least $5 trillion since the March 2000 peak and represents nearly half the country's GDP. It was not until 1932 that losses were worse than they are now. The inside truth is that the financial industry does not want you to know and continues to cheer on the long term mantra.
We are somewhat encouraged by our present economic resilience and believe that a similar worst case scenario to the 1930's will not necessarily play out, nevertheless, we see every reason why the damage done to wealth and confidence will lead to a protracted and deep secular bear market at the very least.
The wealth already lost will likely remain lost for at least several years to come.
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Much of the following commentary appeared in prior issues of HD Brous & Co., Inc.'s Crosscurrents. We feel it is important for us to reiterate these views and disseminate this article as widely as possible. <br />
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We were shocked while sauntering through the S&P Marketguide database, when we discovered a group of ten passably representative high tech companies that witnessed huge insider sales. The group included Microsoft, Intel, Cisco, IBM, Hewlett-Packard, EMC, Amazon, Sun Microsystems, Dell and Yahoo. There were 87 sellers and only 3 buyers. Sort of spoke volumes about the lack of fair valuations, we thought. But we wondered whether we might just have hit a dry zone for insider enthusiasm and perhaps we shouldn't have just focused on high tech or sampled so few companies. So we consulted our database and performed a similar exercise for all the 30 Dow Industrial companies and what we found was truly astounding. Hold on to your hats. The most bullish perspective we can provide is that there were buyers at 15 companies and sellers at 28. Only two companies had no sellers, Int'l. Paper and Honeywell, but IP had no insider trades at all (hence we removed them from the charts) and there was only one buyer at HON. There were 23 buys overall and 141 sales for a 6.13 sell/buy ratio, as shown at left below and as huge a gap between the two as we have ever witnessed. <br />
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But it gets worse! The average buy transaction took in 3870 shares while the average sale dumped 241,057 shares, a ratio of 62.3-1. It gets still worse! A grand total of 89,000 shares were purchased versus a grand total of 33,989,000 sold, a ratio of 381.9 shares sold to each share purchased! We're not inclined to dispute the S&P Marketguide numbers. The ratio of shares sold to shares purchased is the most horrendous we could have imagined and clearly illustrates that insiders - who are as acquainted with the current environs as anyone - are abandoning their ownership at record speed. But then again, we mused, perhaps this display of revulsion by insiders towards their own shares might be influenced mightily by the honchos at Microsoft. As previously revealed in Crosscurrents, Microsoft insiders made zero buys, 21 sales and 21.46 million shares were dumped, presumably many by Bill Gates. Thus, we feel duty bound to present the Dow numbers minus the one-sided influence at Microsoft. The tally: 23 buys, 120 sells for a 5.22 sell/buy ratio, still the worst we have ever seen. Average buy; 3870 shares, average sale; 104,450 shares. And as shown at right below, total shares purchased 89,000, total shares sold 12,534,000. Sans Microsoft, 140.8 shares were sold for each share purchased. <br />
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The Inside Truth:<br />
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No matter how we look at the equation,<br />
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we see insider revulsion of monumental proportions.<br />
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For further information, or if you have any question regarding any of our services or research, please call me at (516) 384-9555 or contact me via email. We also strongly suggest you visit the corporate website for HD BROUS & Co., Inc. to find out more about us. Our company has always focused on fairness for investors and institutions and unlike most firms, has consistently recommended"sells" when circumstances pointed to deteriorating fundamentals.
I hope you have enjoyed your visit and please return again. If you know anyone who might be interested in seeing what we have to offer, we'd be happy to have them visit as well!
Alan M. Newman, March 3, 2002
Quelle
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