Warning of performance next year? US stocks "insiders" sell off reaches a new high for a single quarter in twenty years

Recently, the trend of "insiders" selling company stocks among U.S. publicly listed companies has become too strong, raising concerns in the media.

A recent report by the Financial Times stated that a record number of U.S. corporate executives are selling shares of their own companies. From Goldman Sachs to Tesla, and even the media group of incoming U.S. President Donald Trump, a large number of corporate executives are taking advantage of the stock market rise following Trump's election to profit.

Data from VerityData shows that the insider selling rate of stocks among U.S. publicly listed companies has reached the highest quarterly record in twenty years. The sales transactions referred to here involve executives of constituent companies in the Wilshire 5000, one of the broadest indices covering U.S. listed companies, selling stocks. This includes one-time profit-taking transactions as well as periodic sales triggered when prices reach levels set by executives' automatic trading plans.

Additionally, in the fourth quarter of this year, the ratio of insider sellers to buyers among S&P 500 constituent companies was 23.7:1, the highest level since the U.S. first mandated the disclosure of insider trading data in 2004.

The reasons for insiders selling stocks are varied, many of which are unrelated to the company's own prospects. Therefore, the record insider selling does not necessarily serve as a terrifying alarm signal. However, considering the recent returns, high valuations, increasing leverage, and a generally highly speculative environment, insider selling sends another warning to the overall U.S. stock market, suggesting that the market's performance next year may fall short of expectations.

Regarding the correlation between insider trading and market performance, Ben Silverman, research director at VerityData, commented, "Generally speaking, in terms of predictive value, insider selling tends to lead the market by about two to three quarters. When they start to see bubbles forming in the market, they (insiders) become more aggressive in trying to generate liquidity."

However, Goldman Sachs recently projected in a report on global investment for 2025 that the U.S. stock market will have good returns next year.

Goldman Sachs referred to next year as the "Year of Alpha," advising investors to focus on diversification and improve risk-adjusted returns. They believe that high concentration and high valuations are reasons to reduce the weight of U.S. stocks in multi-asset portfolios, while paying attention to Asian stocks such as those in Japan, short-term government bonds, and the U.S. dollar, with gold remaining the best hedging tool.

Goldman Sachs expects global economic growth to remain stable next year, with inflation continuing to decline and monetary policy maintaining an accommodative trend. However, due to the diminishing tailwinds from easing inflation, high valuations of risk assets, and increased policy uncertainty following the U.S. elections, geopolitical risks, and a shift towards "re-inflation," tail risks are increasing Goldman Sachs recommends that investors maintain a moderately overweight position in the U.S. and Asian stock markets, especially in Japan, while holding a neutral stance in the European stock market. Goldman Sachs believes that although valuations are high, strong earnings growth and healthy corporate balance sheets will continue to drive shareholder returns, particularly in the U.S. market.

Goldman Sachs expects a 9% price return and an 11% total return for global stocks over the next year, with these returns primarily driven by earnings growth rather than valuation expansion. The expected return for the S&P 500 index next year is 11%. Due to weak economic activity, tariffs, constrained profit margins, and fluctuations in commodity prices, the expected return for the European STOXX 600 index next year is only 3%