Alarm bells ring as American CEOs cash out of the market

CEOs across the US are offloading their stock options at a record pace, selling off stock worth $600 million per day on an average in August. That will make it the fifth month in 2019 when insider selling has crossed $10 billion. The last time such heavy selling happened was in 2006 and 2007 — just before the global economic meltdown.

Are we at the end of long

bull run

?
US stock markets have witnessed the longest bull run in history that has lasted well beyond 10 years — having commenced on March 9, 2009. A

stock market

is said to be bullish when it avoids a decline of 20% or more in a single trading session or day. There seems to be nervousness among top executives in US as to how long the present bull run will sustain. That could
have led to several CEOs, including founders, to sell stock and cash in.

Executives who have offloaded shares
Three of Facebook’s top executives — including founder Mark Zuckerberg — sold more than $49 million worth of stock earlier this week. Pizza chain Papa John’s former CEO and founder John Schnatter sold $16 million worth of shares in May and another $20 million in stock earlier this week, according to OpenInsider, a website that tracks insider sales.

The reason insider selling spooks markets is simple — when the people in charge of a company are selling their stock, it is seen as a lack of confidence in their company. However, that may not always be the case — some analysts feel the selloff may be to cash in on the buybacks initiated by companies.

And these are ominous signs
The US-China trade war is a major reason that top executives in US are not very confident about the bull run in the market sustaining for too long. The continuing trade war has sparked fears of an impending recession around the world. Experts have predicted that the US economy is likely to enter a recessionary phase next year — the timing of which couldn’t be worse for US President Donald Trump, who will be caught in the midst of a re-election campaign.

Stay informed with the latest Business News on Times of India. Explore updates on International Business, gain insights with Financial Literacy tips, and make use of Financial Calculators. Don’t forget to check the list of Bank Holidays in 2025, including Bank Holidays in January.