Why don’t investors trust the growth of the US stock market
Insider sales growth, low-risk bonds and a growing appetite for hedging positions suggest that large investors do not trust the growth of the US stock market.
Institutional investors (or so-called smart money) are now more focused on buying low-risk bonds. This is not only due to the desire to achieve any profitability, but also to mitigate risk due to increasing uncertainty, in particular, geopolitical risk.
When will smart money be ready to return to the stock market?
Published in an interview On site Bloomberg, along with Wells Fargo’s head of credit strategy, recently indicated that interest from large investors has shifted to low-risk bonds that can bring good returns in the short and medium term.
Billionaire investors, Warren Buffett and Paul Tudor Jones, increase cash reserves, reduce risk and create hedge positions. After a sharp decline in the stock market, no one wants to re-enter a recessionary environment, even achieving low, but steady income.
According to the Reserve Bank of India, the short-term rates changed as well as trends. Due to the continuous relationship between stocks and bonds, stock risks were significantly higher. Stock prices have become more sensitive to current uncertainty about real economic growth, and bond yields are more stable.
In May, Insider sales boomed. In the last weeks, he joined:
- Procter & Gamble’s vice president and chief financial officer, who sold $ 15 million worth of shares
- Director of Best Buy (NYSE: BBY), which sold BBY shares for $ 17.5 million
- Uber’s top manager gave $ 8.6 million in cash to his stock in half
- Many Modern Inc. executives who sold most of their shares
When top managers of large companies start converting their stocks into cash, this is a warning sign for ordinary investors: an improvement is coming. In this case, it becomes clear why “smart money” does not rely on stock market growth.