Are corporate executives (a.k.a. “insiders”) worried that the stock bubble is about to explode? Perhaps. There are more sellers than buyers today than at any previous point in the history of insider transaction data.
Executives might be concerned about having too much exposure to the extreme overvaluation in U.S. equities. The median stock in the S&P 500 sits at the 99th or 100th percentile across a wide range of metrics.
Then again, executive insiders may be more troubled by the froth in initial public offerings (IPOs). Much like the dot-com bubble in 1999, IPOs are unjustifiably hotter than an egg on an Arizona freeway in August.
Or is the unprecedented spike in “borrowing-to-buy” an unwelcome sign? The excess deployment of margin debt has preceded every bearish turn of events for the stock market in the 21st century.
Extreme valuations, IPO craziness, margin debt mania. High-profile executives may be responding to all of these indications by selling shares now and reviewing their decisions later.