Nvidia Insiders Sell!

Brit Ryle

Posted March 8, 2024

The headline sounds pretty scary: “Tech Stocks See Biggest Outflow On Record…”

Bank of America goes on to say that over the last week, tech saw the “largest outflow ever.”

Sounds bad, right?

Well, investors sold a net $4.4 billion worth of tech stocks. That’s a fairly big number. But in context? After rising another 4.4% yesterday, Nvidia now has a market capitalization of $2.3 trillion…

Microsoft sports a $3 trillion valuation. 

So $4.4 billion? Pretty much a drop in the bucket…the very, very large bucket.

Bloomberg reports that Nvidia insiders have been selling stock. It’s often said that insiders are the best measure of a company’s health, so when they start selling, pay attention. 

But then, Nvidia’s insiders sold around $260 million worth of stock over the last two weeks. They’ve got bills to pay too, Ferraris to buy, mansions to build…

That’s not enough to push my panic meter.

Bank of America goes on to report that if you ignore tech, the rest of the stock market saw $6.9 billion of new money come in. And then there’s $6-$7 trillion sitting in money market funds, getting paid 5%. 

5% of $6 trillion is $300 billion. That’s a pretty good return for just letting a pile of money sit there. 

And it’s one of the reasons that high interest rates are said to restrict economic growth. At 5%, that money is just sitting there, doing nothing. 

If interest rates were at 2%, that money would likely get put to work to get a better return…

Maybe it would get loaned out to consumers to buy a house or a car. Maybe it would be lent to a company to fund an expansion, or become startup capital. 

Or maybe it would get invested in the stock market. 

The $4.4 billion that just came out of tech stocks didn’t even cause a ripple. Imagine 10 times that amount coming into the stock market!

Stock prices would soar, investors would feel flush, and then we really would have a bubble on our hands. 

So the Fed might be doing the right thing to just sit on its hands and do nothing with interest rates. 

Have a great weekend, I’ll talk to you next week. 

Briton Ryle
Chief Investment Strategist
Pro Trader Today
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