Are Top Insiders Playing You For A Sucker?

Friday, 19 Jun 2009 | 5:33 PM ET

It seems individual investors are shoveling money into the market. Inflows into equity funds have been very strong over the past four weeks, according to Trim Tabs Investment Research.

And that’s precisely why some pros are getting out. That right, the catalyst that some pros are using to short this market is --you, sucker!


Trimtabs president Charles Biderman is advising all his professional clients to turn entirely bearish on US stocks in part because you’re coming in.

He says individuals pointed to the market’s bottom with record outflows in March and now they’re pointing to the top with hefty inflows.

In other words, retail investors follow the heard and by the time they join the party it’s practically over. That makes you – and me -- a contrary indicator.

"I happen to agree," adds Fast Money trader Guy Adami. "The retail money typically comes in late.”

But why can’t that be a positive?

Are We Just Suckers?
Debating whether it's really such a smart idea to get back into the market, with the Fast Money team.

“They’ve always been wrong before,” says Biderman. “They invest with their eyes on the rearview mirror and their foot on the gas and wonder why they crash.”

In fact, Biderman thinks we're all wrong. He says top insiders of public companies are not buying -- they’re selling – and as fast as they can. Take a look.

Net Corporate Selling
April '09 - $10 Bln
May '09 - $63 Bln.
Source: TrimTabs

Net Insider Selling
April '09 - $1.9 Bln.
May '09 - $2.2 Bln.

What’s the bottom line?

"The market can’t hold up here,” counsels Biderman. And if you want to profit from the pain Biderman has a few suggestions. “Either short bank, retail, or consumer discretionary stocks," he concludes.

Tracking Market Flows
A bearish view on the U.S. economy, with Charles Biderman, Trimtabs Investment Research and CNBC's Maria Bartiromo.

You can see CNBC's entire interview with Charles Biderman in the video to your left.

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Trader disclosure: On June 19th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Seymour Owns (AAPL), (BAC), (F), (NOK); Terranova Owns (SDS), (TER), (XBI), (BTU), (ABT), (MSFT), (HES), (BTU); Terranova Is Short (XOM) Call Spreads; Terranova Is Short (OIH) And (OIH) Puts; Terranova Is Short (RIG) And (RIG) Puts; Terranova Is Short (FCX) And Is Short (FCX) Puts; Terranova Is Short (GENZ) Call Spreads; Terranova Owns (GENZ) And Is Short (GENZ) Calls; Terranova Owns (X) And Is Short (X) Calls; Terranova Owns (MS) And Is Short (MS) Calls; Terranova Owns (DIS) Call Spreads; Terranova Owns (BRCM) And Is Short (BRCM) Calls; Terranova Is Short (IBM) Calls; Terranova Owns (RIMM) And Is Short (RIMM) Calls;

Terranova Works For (VRTS); Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.; Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO; Virtus Diversifier PHOLIO Owns (IGE), (DBC), (DBV); Virtus Investment Partners Owns More Than 1% Of (ABD), (CAL), (CLB), (DLR), (EPR), (EXR), (IGE), (MEE), (DBC), (DBV), (DBA), (SKT), (UA), (WBMD); Virtus Investment Partners Owns More Than 1% Of St Mary Land & Exploration Co,;Virtus Investment Partners Owns More Than 1% Of Seagate Tax Refund Rights


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