Game of Trades: They Sold the Top (Again)

Looking for a sign that markets might be overbought and ready to trend lower? Simply take a look at whether or not billionaire owners of major companies are selling off their shares.

In March, as markets hit their recent peak, a number of billionaires made some big sales. That includes Amazon (AMZN) founder Jeff Bezos, who has been selling off billions of dollars of shares in recent years. But more current insiders have also been sellers.

That includes Meta Platforms (META) founder and CEO Mark Zuckerberg, who sold some shares in March.

While the March selloff wasn’t huge, a mere 6% decline, that knocked out $2 trillion in total wealth. And it saved big insiders millions of potential losses.

These big insiders can be a good indicator in and of themselves. But investors can also look at the ratio of total insider sales to buys.

Typically, when the ratio of selling to buying is under 12, it’s bullish. Insiders are often given stock options, and have many reasons to sell, from diversifying and cashing out.

During March, the ratio surged, indicating time to take some speculative positions off the table.

Remember, insiders have only one reason to buy. That’s because they see their company’s shares as massively undervalued.

With the ratio coming back down, it may be a sign that investors are safe from a sizeable market decline in the coming weeks.

To see the full analysis, click here.