What's the signal? As the stock price hits a new high, American executives collectively cash out at high levels.

Zhitong App learned recently that Jeff Bezos of Amazon, Jamie Dimon of JPMorgan Chase, and Mark Zuckerberg of Meta Platforms have all sold a large amount of their company's shares, sparking market speculation: does this mean that the stock prices will no longer rise?

Data shows that Bezos sold 50 million shares of Amazon stock in just 9 trading days this month, worth an estimated $8.5 billion, a remarkably large amount. Zuckerberg, on the other hand, cashed out nearly 1.8 million shares of his social media empire for over $400 million in the last two months of 2023. Dimon of JPMorgan Chase joined the ranks this month, selling around 822,000 shares of his bank for about $150 million.

Over the past year, Meta Platforms' stock price has surged by 186%, JPMorgan Chase by nearly 30%, and Amazon by almost 90%. The stock prices of these three companies are all approaching historic highs.

Prior to his recent transactions, Zuckerberg had not sold Meta Platforms' stock for nearly two years. Before 2019, Bezos sold less than $3 billion in stock annually, but by early 2020, he sold over $3 billion in stock in just 4 days. Now, Bezos has sold nearly three times that amount in 9 days. This is also the first time in 18 years as CEO that Dimon has sold JPMorgan Chase stock.

While there are many reasons why executives sell stock, for example, according to a company spokesperson, Zuckerberg sold Meta Platforms stock mainly to fund charitable activities, pledging to donate 99% of his shares for charitable purposes; reports suggest that Bezos cashed out for significant payments including yachts, space ships, and luxury homes.

Dimon's stock sale is part of a prearranged trading plan set in 2022, where stock transactions occur automatically according to a predetermined schedule and price targets. Dimon has insisted that the motive behind the transactions is not due to any particular concerns about the bank's survival, but rather his belief in JPMorgan Chase's future potential.

However, considering the significant rise in the stock prices of these three companies, it appears that the potential for further increases may be limited.

Sharing the Risk

If these executives have almost all of their wealth tied up in one stock, they may want to diversify their investment portfolios or realign them as part of retirement or inheritance plans.

Some analysts believe that Dimon's sale is a means of diversifying his personal holdings to protect himself from any future market downturns. Bezos' sales indicate his focus on wealth diversification and pursuing other ventures. Despite this, executives should fully realize the message they are sending to the market when they sell a large amount of company stock. It is well known that Buffett has never sold any shares of Berkshire Hathaway (BRK.A.US)(BRK.B.US).

Buffett has stated that investing over 99% of his wealth in Berkshire stock means his interests are aligned with the shareholders, and this "risk-sharing" demonstrates his long-term confidence and commitment to the company.

It is worth emphasizing that Bezos, Zuckerberg, and Damon's sales represent only a small portion of their holdings, indicating they still hold a significant amount of stock in their respective companies.

However, they have not been buying back their company's stock, suggesting they believe the best scenario has not yet arrived to increase their exposure to the company in their personal investment portfolios. Instead, they have been selling stock, which may signal that these companies' stocks have been fully valued.