Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

FAANG Executives Selling Their Stock Is a Warning Signal

Stock-Markets / Stock Market 2017 Jan 03, 2018 - 07:59 AM GMT

By: John_Mauldin

Stock-Markets

BY JARED DILLIAN : Nobody has a better insight into the future prospects of a company than its top-tier employees.

Executives will always boast about their businesses, but it’s what they do with their own money that really matters.

I’m talking about insider trading.

Not the illegal kind, but rather planned buys and sells of stock by the company’s insiders—the directors, executives, and founders.


If they are buying their own stock, they’re confident about their company’s prospects. Future potential may not be fully priced in. That’s a good sign for investors.

But when executives hit the sell button, it’s time to be careful. They may believe their company stock is fully valued.

Let’s look at what’s happening with FAANG stocks.

FAANG Executives Are Getting Out

Over the past year, FAANG executives have been selling their stock en masse.

Take a look at these sales.

In September, Facebook announced that CEO Mark Zuckerberg will sell between 35 million and 75 million shares over the next 18 months. At the current share price, that’s between $6.1 billion and $13.1 billion worth of stock, which is one of the biggest insider sales ever.

And that’s on top of the $1 billion worth of stock he’s sold in the last 18 months.

Amazon CEO Jeff Bezos recently sold a million shares in the retailer for $1.1 billion. That adds to the million shares he sold in May this year. The size of Bezos’ sales can’t compare to Zuckerberg’s massive sell-off, but it’s big enough to pay attention.

In August, Apple CEO Tim Cook sold 268,623 shares in Apple, raising $43 million. This follows on the $65 million worth of shares he sold in 2016.

It was a tiny sale in this context, but are you seeing the trend yet?

Of course, there are many legitimate reasons for a company executive to sell shares. But here’s the thing—executives don’t like to cash out on the lows.

Top Tick?

Look what happened with Amazon in the last five years.

Source: Mauldin Economics

In August 2016, CEO Jeff Bezos sold one million shares, raking in over $757 million. While shares moved higher for a few months, they dropped by 12% in October.

The same happened in 2013. In November of that year Bezos sold a million shares, pocketing around $250 million. The stock moved higher for a brief period, before falling almost 30%.

A 35% correction followed his 2015 sale of over a million of sales, too. However, the price didn’t drop to the previous low.

Nevertheless, Bezos appears to know when to sell.

Bezos, Zuckerberg, and Cook aren’t the only executives selling stock at the moment.

This indicates it’s time to be careful.

FAANGs haven’t seen a real correction in almost two years. They’re priced for perfection.

Amazon’s P/E ratio is almost 300. Netflix trades on a ratio of around 185. Facebook looks cheap in comparison on a P/E of “only” 40.

The fact that company insiders such as Zuckerberg, Bezos, and Cook are selling down their holdings only reaffirms to me that we are near the top.

Protect Your Gains

If your portfolio has enjoyed a strong rise this year, consider taking some profits. Right now. Don’t be greedy—rebalance your portfolio.

Look beyond the FAANGs and consider diversifying into international stocks. While the S&P 500 is near its all-time highs, there are many regions across the world that are out of favor.

Europe and the UK are home to several world-class companies that currently trade at attractive valuations.

Consider adding emerging markets exposure. The long-term investment opportunities offered by the world’s developing countries are compelling. China, Taiwan, and India are all growing significantly faster than most developed countries. But decent returns don’t come without risk, so keep a wary eye on trends in those markets.

The good news is that while the US dollar is still strong, today you can buy more for your money.

Another good addition to your recession-proof portfolio would be precious metals. Gold is a “safe haven” asset and can offer protection in times of market volatility.

The vast exchange-traded fund (ETF) universe provides you with access to any of these investments through a simple tracker fund.

Whether your interest is Chinese equities, European dividend stocks, emerging market small caps, or gold, there’s a low-cost ETF available that can get you instant exposure.  

Don’t be the investor who regrets not taking profits when the FAANG stocks pull back. Rebalance your portfolio while you still have time. 

Free Report: 5 Key ETF Trading Strategies Every Investor Should Know About

From Jared Dillian, former head of ETF trading at Lehman Brothers and renowned contrarian analyst, comes this exclusive special report. If you’re invested in ETFs, or thinking about taking the plunge into the investment vehicle everyone’s talking about, then this report is a clever—and necessary—first step. Get it now.

John Mauldin Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in