Between February 1 and March 19, corporate leaders made a clever decision to sell their stocks in order to avoid a potential loss of $1.9 billion in total. They sold a total of $9.2 billion in their firms’ stocks right before the stocks were at their lowest on March 20. Most of the sellings were done through pre-established trading schedules in order for the executives to not be accused of insider trading.
Amazon CEO Jeff Bezos was the largest seller, according to The Wall Street Journal. Bezos sold $3.4 billion in company shares during the first week of February. The sale allowed Bezos to avoid losing nearly $317 million that he had invested into the stocks. Jeffrey Sprecher, CEO of Intercontinental Exchange and chairman of New York Stock Exchange, was another investor as he traded $18 million in stocks to avoid losing $3 million. Even CEO Larry Fink of BlackRock, the largest asset management company, sold $25 million on February 14 in order to avoid losing more than $9.3 million.
Executives usually sell stocks towards the beginning of the year as there was a 33% sale volume within the recent weeks, compared to two years ago. However, U.S stocks plummeted over the course of six weeks due to the pandemic of COVID-19 and the oil-market struggle between Saudi Arabia and Russia.
Due to the COVID-19 coronavirus pandemic, investors were worried about the impact that it could cause so they made the decision to panic-sell their stocks out of fear of losing their money. As a result, circuit breakers, a temporary halt on trading, were used four times in March for 15 minutes each.
Dow Jones Industrial Average (DJIA), a stock market index that measures the stock performance of 30 major companies within the United States, fell over 1,3000 points, or the dollar amount that has changed, causing one of the 15 minute spending suspensions. DJIA then traded in more than 3% of stocks and a 28% surge, formulating with one of its highest closing levels since March 13. Other stock markets were also harmed and affected as their points tremendously dropped as well.
As of late April, the U.S stock market has been in a loop as it continues to hit new highs and lows. Recently however, the stock market has hit highs due to the stock market rally in early April as well as the decline of the Covid-19 cases. However, since the oil market began to decrease to -$37.73 per barrel, nearing -$100 per barrel within the next month according to Mizuho analyst, the market became vulnerable.
Usually when an event like this occurs, people tend to panic-sell in order to avoid losing more money. However, panic selling in the stock market is a risky strategy since the investors are not aware of when they will be able to re-enter the market to purchase again, having even more money being lost if they miss significant market gains.