Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
Will Biden’s Neo-Populist Economic Doctrine Support Gold? - 25th Sep 21
Markets Deflationary Winds Howling - 25th Sep 21
Crude Oil Price Piercing the Sky: Where Will We See the Black Gold by Xmas? - 25th Sep 21
Cryptocurrency policy choices and consequences - 25th Sep 21
The Next Emma Raducanu UK Tennis Star Pleasing the Crowds at Millhouses Park Sheffield - 25th Sep 21
Stock Market Rescued by the Fed Again? - 24th Sep 21
Are Amazon Best Cheap Memory Foam Mattresses Any good? Bedzonline £69 4ft Small Double ECO Example - 24th Sep 21
Evergrande not a Minsky Moment - 24th Sep 21
UK Energy Firms Scamming Customers Out of Their Best Fixed Rate Gas Tariffs - 23rd Sep 21
Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Should School Children be Jabbed with Pfizer Covid-19 Vaccine To Foster Herd Immunity? - UK - 23rd Sep 21
HOW TO SAVE MONEY ON CAR INSURANCE - 23rd Sep 21
Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
Trading Crude Oil ETFs in Foreign Currencies: What to Focus On - 22nd Sep 21
URGENT - Crypto-trader event - 'Bitcoin... back to $65,000?' - 22nd Sep 21
Stock Market Time to Buy the Dip? - 22nd Sep 21
US Dollar Bears Are Fresh Out of Honey Pots - 22nd Sep 21
MetaTrader 5 Features Every Trader Should Know - 22nd Sep 21
Evergrande China's Lehman's Moment, Tip of the Ice Berg in Financial Crisis 2.0 - 21st Sep 21
The Fed Is Playing The Biggest Game Of Chicken In History - 21st Sep 21
Focus on Stock Market Short-term Cycle - 21st Sep 21
Lands End Cornwall In VR360 - UK Holidays, Staycations - 21st Sep 21
Stock Market FOMO Hits September CRASH Brick Wall - Dow Trend Forecast 2021 Review - 20th Sep 21
Two Huge, Overlooked Drains on Global Silver Supplies - 20th Sep 21
Gold gets hammered but Copper fails to seize the moment - 20th Sep 21
New arms race and nuclear risks could spell End to the Asian Century - 20th Sep 21
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21

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