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Who Is Buying American Stocks?

Written by Gary North on July 2, 2014

Is it hedge funds? Nope. They are selling.

How about retirement funds?  Not this time.  They are selling.

How about insurance forms? Nope. Sellers.

Insiders!  They know a good thing when they see it! They do, indeed. They are net sellers.

Then it must be foreigners.  Sorry. They are selling.

Then who?  Corporations, mostly. They are using business profits to buy back shares.

Individuals also buy, but not as much as corporations.

We have not seen this much buying back of corporate shares in years.  Specifically, not since since 2007. That was the #1 year for corporate buy-backs.

You may recall what happened in 2008.

But why do they do this? What value does this add to plant capacity? To marketing? To innovation? None.

But it runs up stocks in stock option deals. Who has such deals? Senior management.

Who make the decision to buy back shares? Senior management.

So, stocks go up, yet corporate capital is being depleted. Is that it? Yes.

But isn’t this like eating your seed corn? Yes. But whose seed corn is it? Not senior management’s. They will be replaced soon enough. Turnover is inevitable. The question is: Can they time their exit correctly?

I believe this is the phrase: “Take the money and run.”

Timing is everything when it comes to stock options and retirement.

There is always the old maid. Pass her on!

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10 thoughts on “Who Is Buying American Stocks?

  1. michael says:

    Like we've always known the game is rigged for the 1%….this pop is going to be very load!!!

  2. michael says:

    Sorry for the error….- very loud!

  3. Partially correct, The stock market is controlled by the Blackrock group of companies. By having their hedge funds buy or sell to their other hedge funds they know exactly how stock prices will move. Tips are given to judges and government officials on these moves and billions can be transfered to them as bribes for favorable decisons for islamic issues. Imagine the option gains if movements are precisely known (Blackrock of Mecca)

  4. I have been writing about QE and the Bernanke Bubble for over a year now. I believe the balloon will pop when the Fed starts tapering. I cannot see that happening until after this election. Once the results are in and they no longer need to try to protect the Democrats, it could be any time. When the smart money goes home and the gamers are gaming the system, it's time to start stuffing dollars under the mattress. It is scary out there. See my blog at http://cranky-conservative.blogspot.com

  5. I've always opposed the corporation on Biblical grounds–the idea of a legal entity behind which the principals can hide, remaining relatively anonymous and evading full responsibility for their actions. Anarcho-libertarians are fond of saying (correctly) that monolithic, impersonal governments are really comprised of *individuals*, all seeking to maximize their own benefit. The same can be said for corporations.

    There seems to be an uncanny resemblance between corporate personnel and unelected bureaucrats, and between corporations and government agencies. In both, individuals hide behind their respective structures. The East India Company, with its vast powers and private armies, has its modern bureaucratic counterparts in the EPA, the USPS, the ATF, etc. (especially now, when said agencies are buying large quantities of weapons and ammunition!).

    Abolishing the corporation is the solution, as well as abolishing those agencies. They were created by the stroke of a pen, they can be abolished the same way.

  6. Great article! Thanks for letting us know. I now realize why the market is rising. They go got government subsidies to raise the price artificially and at the same time take their reward for helping the illegal administration out before the rug is pulled.

    All SMOKE & MIRRORS! A crash is coming to start WW3 and I hope they get caught in the crosshairs.

  7. 1baronrichsnot1 says:

    The federal gov't itself is buying the liberal stocks of liberal companies. Like birkshire hathaway, soros companies, GM, Green energy companys, etc. Propping them up for the war chest of the elections, printing the money, stealing it, for the DNC! Its a real corrupt mess! Worse I've ever seen!

  8. Owen Kinnan says:

    Money always flows to where it is treated best. We now have a global economy. Abolish corporations in one country, they will move to another and set up shop. No one will ever be able to abolish corporations, due to the global economy. Have you read recently about Walgreens? Another example is Halliburton moving to the middle east and headquartering in Dubai. There will always be a place for corporations. Like it or no.

  9. Owen Kinnan says:

    I haven't read one comment here about HFT. But, HFT does play a role. Banks, investment houses, etc. etc. keep the liquidity flowing and the bots trade against each other at the speed of microseconds. Mix that in with FED sponsored liquidity and with what has already been posted here, and you have——-??????

  10. Winston says:

    When stock buy-back is occurring those in senior management are trying improve stock analyst opinions of the business and when that superficial appreciation is done the senior management hopes to attract suitors to buy the business making those managers rich overnight. It’s a sad thing in our market when individual investor are unaware of hose games and get suckered in to a losing scheme.