NOw think what this means for stock prices. Yields therefore, dividend divided by stock prices have dropped. For yields to return to 'normal' levels, either dividends will have to be restored or prices will have to drop.
As stock prices have risen, price earnings ratios have risen. The higher the p/e the more risk investors are assuming, and for lower than ever dividend yields. No wonder insider selling at companies continues at a furious pace.
"It's not a very complicated story," said Charles Biderman, who runs market research firm Trim Tabs. "Insiders know better than you and me. If prices are too high, they sell." Biderman, who says there were $31 worth of insider stock sales in August for every $1 of insider buys, isn't the only one who has taken note. Ben Silverman, director of research at the InsiderScore.com web site that tracks trading action, said insiders are selling at their most aggressive clip since the summer of 2007. For those keeping track, the stock market peaked in the fall of 2007.
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