As we have reported repeatedly over the last few months, insiders have voted a resounding “no confidence” in the future share price of their own corporations via the use of their own dollars. Insider trading trends have remained extraordinarily lopsided despite signs that the economy is stabilizing. The latest report showed 6 sellers for every insider buyer. Well, today’s business roundtable survey results shed a bit of light on their current outlook for the economy, spending and hiring – and perhaps explains why insiders aren’t buyers of their own shares.
The survey results showed that 49% of all CEO’s expect their sales to be flat or down in the coming 6 months. 51% expect an increase. 79% of all CEO’s surveyed expect their capital spending to be flat or down in the coming 6 months. 87% of all CEO’s expect to do no hiring in the coming 6 months:
It will be nearly impossible for a robust recovery to develop without a capex recovery and hiring. With the market currently pricing in 20% EPS growth for 2010 and 4% GDP it might be more than safe to say that investors have grown overly optimistic about the strength of the recovery.
Source: Business Roundtable
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.