Stress Test Results Day

The bank stress test results are being released at 5 pm today. I can't wait until it's over. The whole process has been tiresome every step of the way:

• Banks are supposed to be testing their own capital levels constantly
• The regulators are supposed to be doing the same. Were they ever?
• Selective results have been leaked, especially to the Wall Street Journal, every step of the way
• If the Fed says a bank needs money, they might be wrong
• If the Fed says a bank needs money, the bank might disagree
• If the Fed tells a bank to raise money, the bank might not be able to
• If the Fed tells a bank to raise money, the bank might refuse

I can't imagine a real surprise at 5 pm given the furious pace of leaks over the last couple weeks.

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There are plenty of people reporting this week that there has been a huge surge in insider selling. Corporate execs selling their own stock is sometimes a sign that they believe the stock is fully valued and in such cases should net be ingored. That is not an easy conclusion to come to since execs are among the worst-diversified investors on the planet. Add to that the fact that many execs borrow against the stock they own and you have cases where last year's sickening decline followed by this year's 30% pop makes selling some stock the investment equivalent of a sigh of relief.

If you're not sure how to interpret a specific case of insider selling, ask yourself what you would do in the same situation - as an investor, not an exec.