Corporate Insiders Are Selling Stocks At The Fastest Pace In 10 Years

www.activistpost.com

By Michael Snyder

A lot of things are starting to happen that we haven’t seen since the last recession.  A few days ago, I wrote about the fact that home sellers in the United States are cutting their prices at the fastest pace in at least eight years, and now we have learned that corporate insiders are selling stocks at the most rapid pace in ten years.  So why are they dumping their shares so quickly?  Do they know something that the rest of us do not?

Certainly nobody can blame them for taking advantage of the ridiculously high stock prices that we are seeing in the marketplace right now.  But stock prices have been very high for a while.  Why is there such a mad rush for the exits all of a sudden?  According to CNN, corporate insiders have sold 5.7 billion dollars worth of stock so far in September…

It would be one thing if September was an anomaly, but the fact that insider shares were being sold so rapidly in August as well indicates that this is a clear trend.

Could it be possible that these corporate insiders believe that the market is about to take a tumble?

Of course it doesn’t exactly take inside information to see the writing on the wall.  On Wednesday, the Federal Reserve raised interest rates for the third time in 2018.  Overall, this is the Fed’s eighth interest rate increase since 2015, and it looks like the Fed is anticipating three more rate hikes in 2019…

This is terrible news for stock market investors, because every rate hiking program in the history of the Federal Reserve has ended in a stock market crash and/or a recession.

In fact, since 1957 there have been 18 rate hiking cycles, and every single one of them has ended in disaster.

So do you think that we are going to beat the odds this time?

After raising rates again, the Fed released a statement in which it said that it expects the U.S. economy to grow “for at least three more years”…

You can believe that if you want, but it is also important to remember that Federal Reserve Chairman Ben Bernanke assured all of us that a recession was not coming in 2008.

And later we learned that the moment when he made that statement a recession had actually already begun.

Needless to say, investors were not thrilled by Wednesday’s rate hike, and the Dow Jones Industrial Average dropped another 100 points.  Stocks have really struggled this week, and we continue to get more disappointing news from the real economy.  On the heels of a “disappointing” existing home sales report, we just received news that new home sales missed expectations…

And the trade war continues to take a toll as well.  According to Ford’s chief executive, the metals tariffs are going to result in a billion dollars in lost profits for his company…

Perhaps this is one of the main reasons why it looks like Ford could soon be laying off thousands of workers.

The “smart money” is always one step ahead of the “dumb money”, and corporate insiders have a much better view of what is really going on inside their companies than any of the rest of us do.

So if they are collectively convinced that now is a perfect time to sell, that is a major red flag.

On Wall Street, actions speak much louder than words, and corporate insiders are sending a very loud message by selling so many of their own shares.