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May 31, 2001

Falling Earnings + Insider Selling = Get Out!

Earnings are falling through the floor. Analysts' expectations for earnings for companies in the Nasdaq Composite are running 21% lower than they were in January, according to Thomson Financial. And we suspect that real earnings will be much, much lower.

Plus, profit margins haven't been this bad in years. Pretax profit margins in the first quarter for nonfinancial corporations plunged to 10% -- the worst in seven years.

No wonder top execs are leading the charge to sell! Company directors selling their shares outnumber buyers by three to one on the New York Stock Exchange, according to market trackers at Vickers Weekly Insider. Directors have the inside scoop on company earnings. More than anyone, they would know when companies are overvalued -- and when it's time to sell.

Dollar figures on insider selling vs. buying are even worse. Insider buying rose 2% in April to $171.8 million, according to a report from But the dollar value of insider selling rose 17% to $2.7 BILLION. Again, insiders obviously don't think stocks are bargains at these prices.

Wall Street is quick to tell investors that stocks are a bargain at these prices, but be warned -- this is one of the biggest bear traps in history!

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