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Retail investors have recently fled from the equities market, taking over $53 billion with them, and pouring it back into bond funds. An understandable reaction, given the market's extreme volatility over the past couple of years, and no end to the jobs and housing crises in sight. But what's surprising is the market's behavior in the face of this investor exodus -- if individuals aren't investing, then why does the market continue to climb?
One possible explanation: the Fed's Treasury-buying programs. Here's how it works: the Fed purchases Treasury Bills, aka government bonds, from financial institutions on the open market. The idea is that banks, now flush with cash, will then go out and buy riskier assets than T-Bills -- i.e., stocks -- thereby spurring liquidity. And since the Fed owns the printing presses, it has an infinite supply of money to pour into a flailing economy. But here's the rub: for one, you run the risk of devaluing the dollar. And two, the market has pretty much come to not only expect but rely on these supportive measures from the government.
How long the market will continue to rally is anyone's guess. What we want to know is, which rallying stocks are being fueled by retail buying? That data is tough to find -- so we're taking our cues from the trades of company insiders. At the end of the day, they're also retail investors; and if they're using their own money to buy company stock, it's a good sign that the momentum may continue.
These insiders seem to think that the rallies in their company's stock are sustainable -- do you? (Click here to access free interactive tools to analyze these ideas.)
|Power One (Nasdaq: PWER )||Kendall Bishop (Director), Tina McKnight (Gen. Councel) and Steven Hogge (Officer) collectively bought $281,950 worth of stock between Aug. 20 and Sept. 17.||
|Akorn (Nasdaq: AKRX )||Joseph Bonaccorsi (Gen. Counsel), Kenneth Abramowitz (Director) and Timothy Dick (CFO) collectively bought $42,945 worth of stock between Aug. 12-24.||
|Sauer-Danfoss (NYSE: SHS )||Jesper Christensen (CFO) and Sven Ruder (CEO) bought worth of stock $125,800 on Sept. 9.||
|MBIA (NYSE: MBI )||William Fallon (President) bought $218,000 worth of stock on Aug. 25.||
|Complete Production Services (NYSE: CPX )||Harold Hamm (Director) bought $1M worth of stock on Aug. 26.||
|3-D Sys (Nasdaq: TDSC )||Kevin Moore (Director) bought $232,384 worth of stock between Sept. 2-9.||
Insider trading data sourced from AOL Money, performance data sourced from Finviz. The list has been sorted by annual performance.
Interactive Chart: Press Play to see how the market caps for all the stocks mentioned above have changed over the last two years.
Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.