Back Stories 9/7/20
September 6, 2020
September 6, 2020
Stupid is Knowing the truth, seeing the truth, but still believing the lies. Everyone knows the MARKETS is a bubble. Yet, the market is never wrong when it comes to your P&L
Warning Flashes As Corporate Execs Dump Most Stocks Since 2015
The S&P500 hit an all-time high price earlier this week, with a forward P/E multiple surpassing the dot com peak of 27x, printing at 27.02x. These mind-numbing valuations (before Thursday’s panic sell) have been met with intense insider selling as corporate executives dump billions of dollars worth of their stock into unsuspecting Robinhood traders.
Data compiled for the Financial Times by Smart Insider shows insider selling by 1,042 chief executives, chief financial officers and company directors in Aug. was the highest dollar amount since Nov. 2015. The total number of execs disposing of their stock as valuations, in some cases, surged beyond dot com levels, was the highest since Aug. 2018.
The insider selling frenzy has been happening as only a handful of technology stocks push overall main equity indexes to record or near-record forward P/Es. The optics of insiders selling in force is not a good one, indicating these business elites don’t believe in today’s rich valuations as the economic recovery stalls.
For some historical context, after insiders dumped billions of dollars worth of stock in Nov. 2015, the S&P500 tumbled nearly 14% over 65 days into a low in late Jan.-Feb. 2016.
“Insiders at Nasdaq 100 index companies are harvesting a once-in-a-millennium bonanza,” said Vincent Deluard, a macro strategist for StoneX.
Insiders are suggesting that current valuations aren’t just rich, but the latest rally in stocks this summer is not sustainable, rather it could be viewed as a blowoff top.
The above is only the tip of the iceberg, it will become worse as the election day gets closer. Why, because many of the Fangs will be broken up from Facebook to Google based on Anti-Trust Laws. That UNCERTAINTY will bring the house of cards down.
Great and Many Thanks,
Jack F. Cahn, CMT
Contrary Thinker since 1989,
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