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On January 20, 2009,
many major and regional bank stocks
declined over 20%. The following day it
was reported that CEOs of some of the
largest institutions had bought stock in
their own institutions on the day of the
big declines. |
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Bank of America's CEO
Ken Lewis purchased 200,000 shares of
BAC for about $1.2 million. Chase's CEO
Jamie Dimon purchased 500,000 shares of
JPM for about $11.5 million. |
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An observer of
today's market activities might draw the
conclusion that such purchasing was
seemingly done in concert
following a high-level plan to
demonstrate confidence in these
institutions on the part of their top
executives. |
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An observer could
also deduce that the amounts of money
invested by these executives are
relatively small portions of their
annual remunerations and of their net
worth. |
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For them to
buy-and-hold these shares for several
years amounts to a trivial investment
position. However, amidst today's
down-trending stock market, these
purchases portray confidence to the
average man in the street who is
watching the actually irrelevant details
of daily trading. |
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So, all you
men-in-the-streets, listen to the music
of the flutes. It is apparently safe for
you to follow these CEOs, jump right in,
buy a few shares at these low prices,
and hold on for the years it may take
for these institutions' stock prices to
recover. |
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Just be
certain to not get distracted if the
sound of the piper's flute stops or by
the sound of your investment falling. If
you get frightened into selling at a
lower price, or simply need the money to
pay your household bills -- unlike these
CEOs -- just call these pied pipers and
ask them if they will reimburse you for
your losses. |