Monday, January 4, 2010

The antidote for the Great Delusion: The Great Deluge!

And that's the deluge coming from capital gain taxes!

But supposedly nobody has any gains?

With overseas market up close to 80% last year, and and 80% rally from the lows in the NAZ, and a market heading to 1440--are you telling me that capital gain taxes won't be making up the slack for some depleted coffers?

But don't let Charles Biderman of Trim Tabs tell you that. Remember him? Last March, at option expiration, he said the market rally was over!

Then last June, at option expiration, he said the market rally was over!

 The at the end of August, the NY Times had this piece where Chuck Biderman said sell:

On Friday, the research firm TrimTabs reported that insider selling had grown to $6.1 billion in the month of August through last Thursday, its highest levels since May 2008 — when the Dow Jones industrial average was floating above 12,000, compared with just over 9,500 at Friday’s close. 

The ratio of insider selling to insider buying also soared in August, to about 30 to one, its highest levels since the firm started keeping numbers in 2004.

“You have a classic case of greed stampeding investors into believing that nirvana is at hand,” said Charles Biderman, chief executive of TrimTabs. “We just don’t see how the market’s going to last.”

So since Biderman was so wrong, he now blames it on the Government. Oh my! The Government was the buyer! Thus there won't be any capital gains, because Uncle Sam owns all the stocks! And the Chinese own all our bonds!

And Zero Edge, gives TrimTabs credence because 25% of the top 50 hedge funds use it for guidance.

Use it for guidance? Then they're not in the top 50 anymore!

"We cannot identify the source of the new money that pushed stock prices up so far so fast.  For the most part, the money did not from the traditional players that provided money in the past:
  • Companies.  Corporate America has been a huge net seller.  The float of shares has ballooned $133 billion since the start of April.
  • Retail investor funds.  Retail investors have hardly bought any U.S. equities. Bond funds, yes. U.S equity funds, no.  U.S. equity funds and ETFs have received just $17 billion since the start of April.  Over that same time frame bond mutual funds and ETFs received $351 billion.
  • Retail investor direct. We doubt retail investors were big direct purchases of equities.  Market volatility in this decade has been the highest since the 1930s, and we no evidence retail investors were piling into individual stocks.  Also, retail investor sentiment has been mostly neutral since the rally began.
  • Foreign investors.  Foreign investors have provided some buying power, purchasing $109 billion in U.S. stocks from April through October.  But we suspect foreign purchases slowed in November and December because the U.S. dollar was weakening.
  • Hedge funds.  We have no way to track in real time what hedge funds do, and they may well have shifted some assets into U.S. equities.  But we doubt their buying power was enormous because they posted an outflow of $12 billion from April through November.
  • Pension funds.  All the anecdotal evidence we have indicates that pension funds have not been making a huge asset allocation shift and have not moved more than about $100 billion from bonds and cash into U.S. equities since the rally began.
If the money to boost stock prices did not come from the traditional players, it had to have come from somewhere else.

We do not know where all the money has come from.  What we do know is that the U.S. government has spent hundreds of billions of dollars to support the auto industry, the housing market, and the banks and brokers.  Why not support the stock market as well?
And I'm off my rocker for comparing these sages with biblical prophecy? At least, I give you something that will happen, before it happens, not some BS, after it happens, and after you lose your money, and after you've paid a fee for these shills to fleece your pocket!

He's just another bear drowning in his own Great Delusion!

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