FOR EDUCATION ONLY
What Do They Know?
Insiders Are Dumping Stocks at a Pace Never Seen Before in all of US History
Something really strange is happening in U.S. financial markets over the past few weeks. CEOs and corporate insiders have been dumping stocks at a far faster rate than we have ever seen before. Do they know something the rest of us don’t? If the stock market is booming as the media keeps insisting, and this rally will go on forever, like many investors want to believe, then why these insiders are selling their stocks as fast as they can before the year is over?
While some are still choosing to believe that stock prices will continue to soar into the stratosphere, those who are in the top-tiers of the market are heading for the exits. Of course, if they can see that a brutal stock market crash is fast-approaching, the perfect time to get out is now. After all, you can only make money in the stock market if you get out before the bubble bursts. And it seems like many of the richest people in the world have come to the realization that risks have become too big, especially with the emergence of a new variant that already triggered a crash in some stocks. Perhaps this is the best time to initiate sell-off mode before the whole market irreversibly collapses.
According to CNBC, some big names in the industry have been selling billions of dollars worth of stock over the past few weeks. At least $69 billion in stock have been recently dumped by CEOs and corporate insiders, as lofty share prices seemed to have reached their peak. This is the perfect window to collect profits before losing them.
Elon Musk and Jeff Bezos, the richest men on the entire planet each sold $10 billion in stock already. These insiders know that stock valuations can’t stay this high if production is slowing down, and soon, the rest of the market is going to know that as well. They’ve just started to act before everyone else realized the actual risks they’re in for. Interestingly, this sell-off has begun just as the U.S. economy has started to fall apart again.
We’re currently facing the worst supply chain crisis in history. Our store shelves are getting emptier while inflation is pushing the price of everything to sky-highs. In fact, we haven’t seen these levels of inflation since the 1970s. And the worsening chaos in our streets is compromising economic activity in many of our largest urban areas.
This Thanksgiving, brick-and-mortar sales dropped by 90.4% from 2019 levels, according to data released by Sensormatic. Retail giants were already expecting this to happen. That’s why Target, Walmart and Best Buy opted to keep their doors closed to customers on the holiday. On Black Friday, retail sales dropped by 28.3% compared with 2019 levels, as consumers were faced with fewer choices and higher prices due to shortages and delivery delays. Inflation on everything from fuel to raw materials is leading businesses to pass on those increased costs to consumers. Meanwhile, the latest manufacturing figures were quite a disappointment. Manufacturing rates today are lower than they were at the peak of the health crisis in 2020, tumbling 58.3 percent in November. At the same time, the mainstream media keep trying to put a positive spin on our economic issues. Just a couple of days ago, CNN published an article entitled “Why inflation can actually be good for everyday Americans and bad for rich people”. Inflation is rising way faster than wages. The cost of living is escalating at record speed. So how can you pay down your debt if you have to direct a bigger share of your monthly budget to afford the same things you used to a couple of years ago?
We also cannot forget that home prices are ‘increasing in value’ because the housing market is in a speculative bubble that only exists as long as the Fed keeps pouring more money into the system. But those days are counted, and artificially suppressed mortgage rates are about to soar. Home prices will have to readjust soon, which means that properties, just as stocks, will see their value crashing. And homeowners, just as frenzied investors, will be left scrambling with some painful financial losses.
Our standard of living is being destroyed, and millions of Americans are falling out of the middle class and straight into poverty. And those in a position of power across the global industry and markets can see that more economic damage is coming. That’s why they’ve started to strategize before it’s too late. There are many heavy clouds on the horizon. A perfect storm is just around the corner. And when it comes to 2022, you should get prepared for the worst-case scenario.
A corporate insider is either a senior officer, director, or an above 10% equity owner. Once classified as a corporate insider, people in these positions must adhere to very strict disclosure regulations required by the Securities and Exchange Commission (SEC).
Globally renowned investor Peter Lynch said, “There are many reasons insiders sell, but only one reason insiders buy”. The statement explains that an insider could sell because he/she needs cash or wants to put some money in other investments and diversify risk; however, he will only buy more stock when he believes it will increase in value.