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What Jeff Bezos’ Sell-Off Indicates About the US Stock Market

2 Mins read

The US financial markets may just be on its ‘tipping point’

The global financial crisis of 2008 may appear to be a century-old event for many millennials, even though it’s hardly been a decade since the US economy started getting back on track. I was in high school back then and the final verdict regarding university admissions had just rolled out a few days ago. Most of my friends who were anticipating a scholarship were denied one, simply because the US had officially entered a recession, and colleges and universities were trying to be cautious about spending their multimillion-dollar portfolio for more “useful” research projects. It was a scary day, one that made me realize the importance of keeping up to date with the economic cycle.

When the market took a nosedive, customers were canceling orders, banks were being bailed out with trillions of dollars from the federal government, and businesses that had existed for more than a hundred years were being forced to file for bankruptcy.

But just like every market cycle, the economy recovered and so did the stock market. Within two years, everything was back to normal and companies were able to hire employees once again. Albeit, quantitative easing had implications of producing a weaker dollar, but inflation is a lifestyle cost that most of us have learned to live with.

The cost of goods will, for better or for worse, keep on rising in nominal terms simply because governments will resort to printing excessive amounts of “paper money” whenever the economy is hovering.

Twelve years on, a stock market collapse seems to be long overdue. I am not an advocate of market timing, but a majority of stock market experts such as Ray Dalio of Bridgewater Associates along with the ‘doomsayers’ have come out from their bunkers and are forecasting a stock market collapse.

Anyone who is calling for such an inevitable collapse is now being labeled as “a prodigy with Warren Buffett’s soul minus the grey hair”.

Although the markets are unpredictable, there are always signs left behind in the sands of time. People will usually go back and analyze these little bits of historical evidence, but by that point, their portfolios are usually in a territory from where most never manage to return to “greener” pastures.

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Image: benedettocristofani.net

One such indicator is major executives and CEOs cashing out on some or most of their shares prior to such a crisis.

Amazon’s Jeff Bezos sold off one million shares (worth slightly over $3 billion) of his “flourishing” Amazon stock. But with the revenue generation going upwards of $88.9 billion for the second quarter alone, the stock dump for the tech giant seems especially worrying.

Public filings indicate that Mr. Bezos sold his stocks between $3,102 and slightly more than $3,183 per share.

The company’s stocks have soared — nearly doubling in price since March when the coronavirus crisis in the United States pushed most consumers to shop online to curb the spread of the disease.

Thus, it begs the question…

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