Wall Street Insiders are Selling Like There is No Tomorrow.

Wall Street Insiders are Selling Like There is No Tomorrow.  Should You Follow Their Lead?
 
Wall Street insiders are “retiring” from their respective C-level positions. This frees them up to sell their stock options. Should you follow their lead? Is it too late?
 
So, here are the statistics that you are probably aware of.
 

• There were 3.3 million new unemployment claims this week, for a total of 6.65 million (source: Dept. of Labor). That’s the highest jump ever on record. The previous record was in 1982.
• The secular bull market we enjoyed from March 9, 2009 to February 19, 2020 ended abruptly, and dropped into bear market territory on March 12, 2020. That was the fastest about-face ever.
• 29% losses on Wall Street as of yesterday.
• Almost all companies have withdrawn any financial guidance for 2020.

And here are the projections, data and predictions that you might not be hearing.
 
Wall Street Insiders are Selling and Retiring.

• MGM Resorts Chairman and CEO Jim Murren and Disney’s Bob Iger were two of the first CEOs to retire, on February 12th and February 25th, 2020, respectively. Iger remains the executive chairman until Dec. 31, 2021.
• Bill Gates retired from the boards of Microsoft and Berkshire Hathaway on March 13, 2020.
• Lockheed Martin’s chairman and CEO Marillyn Hewson retired on March 16, 2020 to spend more time with the family.
• Barrick Chairman John Thornton sold almost $50 million in stock yesterday for personal portfolio considerations.

 
That’s only a small sampling of CEOs who are going out on top and/or freeing themselves up to sell stock. Bob Iger boasts of increasing the market cap of Disney five-fold. Hewson rocketed up Lockheed’s shares three-fold. Microsoft is in the trillion-dollar club, along with Apple. Barrick and many other gold miners have had to reduce operations due to the coronavirus.

We’re Already in a Recession

• The 1st Quarter 2020 GDP growth results will be announced on April 29, 2020. There will be a contraction. The only question is, “How large will it be?” Predictions are in the -4% range.
• The 2nd Quarter 2020 GDP growth results will be on July 30, 2020. Projections for the fallout range from -14% to -30% contraction in GDP.

 
This Time Interest Rates are Starting Out Too Low

• Interest rates were too low before the crisis started, and are already at zero – less than two months into this crisis. That, and the extreme amount of financial leverage in corporations, individuals and in society means that bonds can’t help your portfolio stay buoyant. In fact, your “safe” side could be vulnerable to loss of capital, redemption gates and liquidity fees. The vulnerable safe assets include bonds, money market funds, annuities, life insurance, REITs and more.

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The Bailout May Force Banks and Other Companies to Cut Dividends and Buybacks

• UK Banks have already cut their dividends.
• U.S. Airlines have promised to suspend dividends and buybacks if they get the bailout money.

 
Prices are Still High
As you can see from the chart below, stock prices are still historically high – even with a 29% sell-off. This is a chart of price-to-earnings ratios averaged over a 10-year period, in the CAPE system developed by Nobel Prize winning economist Robert Shiller.
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Robert Shiller CAPE Ratio Chart
March 24, 2020

What This Means for You
Over the next few months, there will be a lot of effort from politicians and policymakers to present a positive spin on everything. This is important for our headspace, and to get the economy fired back up as quickly as possible. This is America, and we are a can-do country.

However, we’re in an unprecedented economic disruption that was preceded by over-leverage that hasn’t been seen since before the Great Depression. The last two recessions cost most investors more than half of their retirement. It took NASDAQ 15 years to crawl back to the highs set in March of 2000. Having a properly diversified and protected portfolio allows you to buy low. Having a poorly constructed Buy & Hope Portfolio could mean that you spend the next decade crawling back to even -- or that you must postpone retirement.
 
If you wait for the dire headlines that are coming at the end of this month and then again at the end of July, it will be too late to protect yourself. Wisdom and time-proven systems are the cure, and the time to put them in place is now.

Since we’re all in quarantine, why not join us and learn the ABCs of Money that we all should have received in high school this weekend at our Online Retreat? If you'd like to know exactly what you own now, and a game plan for a more diversified and protected plan, call 310-430-2397 or email info @ NataliePace.com for an unbiased 2nd opinion. 
 
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We live in the 21st Century. Last century strategies don’t work. The sooner you adapt, the faster your life transforms. The Thrive Budget and Easy as a Pie Chart Nest Egg Strategies will be essential tools for a post coronavirus world.  

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Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

Information has been obtained from sources believed to be reliable however NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.