Nothing has buoyed the performance of stock markets more over the past couple of years than stock buybacks by major corporations. With interest rates still at near-record lows, corporations are issuing debt like never before in order to raise money to buy back their stock. That results in higher earnings per share, a key factor used to compute executive bonuses. But there’s another trend sweeping stock markets this year, and it’s not good for Mom and Pop investors.
Throughout August corporate insiders were cashing out of their stocks at the rate of 600 million dollars a day. That’s an ominous sign that insiders know that markets are topping out and are rushing to the exits to cash out before markets tank. So at the same time their companies are buying stocks, the executives are selling. In fact, the last time this happened was back in 2006 and 2007, right before the financial crisis.
There are far too many Americans who are hoping that stock markets will continue to climb. They may sincerely believe President Trump that the economy is strong and that markets just need a little boost to continue soaring. But reality always trumps ideology, and the reality is that the US economy is slowing down and stock markets will slow down along with it.
Just because their man is in office doesn’t mean that conservatives should stop preparing for the worst. Wall Street insiders are doing that already, protecting their assets against a coming crash. Those on Main Street should take heed and start doing the same, otherwise they’ll find themselves in severe financial difficulty just as many did in 2008. It would be the height of irony if those whose discontent with the system resulted in Trump’s election ended up being blinded to the reality that we’re on the verge of a financial crisis that will make 2008 look like chump change.