Financial journalist and neuroeconomist Jason Zweig says don't be happy, worry.
"It is at times like these, when a rising market sweeps our spirits up with it, that investors need to evaluate their emotions and consider whether their beliefs and actions are justified," Zweig writes in The Wall Street Journal.
Since last September through this past March, he notes, officers and directors of publicly traded companies sold twice as much stock in their own companies as they bought, considerably less than the historic average of 7 to one, according to TrimTabs Investment Research.
In August, that ratio jumped to 31 to one.
“The people who run companies don't know exactly what the future holds, but they do know more about their own firms than outsiders do,” Zweig observes.
“If they are furiously selling, how eagerly should the rest of us be buying?”
“The market's light has turned yellow. Don't try to run it.”
Companies have made themselves look profitable by slashing costs but they are not going to rake in more money in the months ahead as long as weakened consumers stay in hiding, according to hedge fund manager Doug Kass.
“I think we’ve seen the high for the year,” Kass told The New York Times.
“There’s a time to hold ’em and a time to fold ’em. And I think we’re at that point.”
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