Jesse Felder’s commentary is always succinct, to the point, and worth considering.
The former hedge fund manager and Founder, Editor & Publisher of The Felder Report provides free excerpts of the reports he writes for his subscribers.
The latest illustrates the rampant speculation in the stock market while, at the same time, the so-called smart money, executives and other insiders, selling at a record pace as shown in two eye-popping charts.
The resolution to this situation will be televised and will not be pretty.
by Jesse Felder
Over the summer I highlighted the rapid increase in leverage being put to use on the part of speculators in the equity markets.
Since that time, it has only continued to grow.
Margin debt, call option volumes, net futures positioning and leveraged ETF assets (depicted below) all show these folks putting on the most extreme leverage we have ever witnessed.
What makes this all the more notable is that the smartest of smart money, corporate executives and other insiders, are now selling at the fastest annual pace on record (largely driven by the most valuable companies in the market).
Setting aside the economic message of the indicator below, the simple fact that insiders are taking the other side of speculators’ record leverage is significant, especially given their stellar track record.
Clearly, America’s CEOs and CFOs are taking the timeless advice of the great John Templeton:
“When you find that the crowd is over-enthusiastically trying to buy, help them and sell. It usually works out.”
Related stories: Seven Ways to Profit in a Greedy Market – Interview with Jesse Felder