Bezos’ Billion-Dollar Bailout — A Premonition or Pure Profit?
The rich cashing in might know something we don’t
The oracle of e-commerce, Jeff Bezos, sees something on the horizon that we mortals don’t.
He has been systematically unloading 50 million shares with a timeline stretching to January 2025 and has cashed out $8.5 billion until now.
Why?
The official version: he’s relocating to Miami to be with his family and closer to his Blue Origin space project.
The unofficial version: he’s using Florida as a tax haven where capital gains taxes are as absent as Seattle’s sunshine.
The ultra unofficial one: a big recession is coming and he’s selling before the shit hits the fan.
Does he see a peak we don’t?
Is this the top of Amazon’s valuation, or is Bezos simply securing his fortune against unforeseen volatility?
One thing is for sure, his timing has been impeccable. Amazon’s stock has risen by 77% over the last year. And considering his relocation, he’ll be saving nearly $600 million in taxes. Washington’s loss is Florida’s gain.
He is not the only one selling
Other rich people are doing something similar.
Jamie Dimon, JPMorgan’s CEO, has recently cashed in $150 million of JPMorgan Chase stock. JPMorgan’s stock has been going nuts, up over 25% last year, with profits hitting record highs thanks to juicy interest rates and strategic acquisitions. Dimon got $36 million in compensation last year and here he is again, cashing in the chips.
After 18 years without a single share sold, why would he do that now?
This is a man who’s seen JPMorgan’s assets and stock value triple under his watch, a man whose decisions are as closely watched as the Fed’s. Why would he sell off a chunk of his kingdom’s treasure this year?
Dimon’s move is part of a larger plan to sell 1 million shares and it has the market intrigued.
Mark Zuckerberg also offloaded a chunk of his Meta Platforms Inc. arsenal late last year, cashing in for the first time in a couple of years.
Meta had a meteoric stock surge, a 172% rocket ride up the NASDAQ charts last year alone. Zuckerberg’s shares were part of a “founder stock purchase” from 2004, with a side of zero-cost options from 2013, now cashed to the tune of nearly $185 million.
To be fair, a significant slice of this stock selloff feeds the Chan Zuckerberg Initiative, Zuckerberg’s philanthropic arm pledging to deploy 99% of its wealth to causes as noble as they are numerous.
Is it just a coincidence that another giant like the Walton family, heirs to the Walmart empire, has discreetly offloaded a staggering $1.5 billion worth of Walmart stock?
This move, executed between February 21 and February 23, saw the transfer of about 8.82 million shares into the eager hands of the market.
The timing of all these sales raises eyebrows and questions alike.
Companies are also piling up cash
Berkshire Hathaway’s Q4 earnings report reveals that its cash reserves have ballooned to a staggering $167.6 billion.
It’s a war chest that could make sovereign nations envious.
Corporate America is swimming in vaults of cash to the tune of $6.9 trillion, while most Americans have depleted their pandemic savings.
Why do they hoard so much cash especially when they could be investing it for higher returns?
One reason is that they’re playing it safe.
Companies are treating their cash reserves like a giant insurance policy against meteor-like strikes. They need cash on hand for those “just in case” moments, like when opportunity knocks or a disaster comes. They want to have the agility to go for opportunities without having to wait for the bank to approve a loan or for an equity offering to close.
There’s also the tax angle where multinational companies play a high-stakes game of keep-away with profits to avoid hefty repatriation taxes (i.e. the money made overseas). For instance, Apple has been borrowing money to pay dividends while sitting on a mountain of cash overseas.
Let’s put on a tinfoil hat for a moment and talk about a third option.
Corporations are preparing for an impending global economic reset. Top executives and board members, those in the know, might’ve been quietly warned of an upcoming financial apocalypse. Anything from a catastrophic cyber-attack that cripples global banking systems, to the sudden collapse of fiat currencies.
Thus, they amass cash to ensure their survival and maintain control during the chaos. Those with the most liquid assets will have the power to adapt to new economic systems quickly, scoop up undervalued assets in the aftermath, and solidify their dominance in a post-collapse marketplace.
They need to emerge on top, otherwise they’ll quickly perish.
Words of caution
Enough of conspiracy theories.
Let’s return to the realm of conventional financial wisdom.
This cash hoarding is nothing new, although the timing can raise some eyebrows. Rich people and corporations have always had strategic plays in the long game of wealth diversification.
All these companies have had major increases in stock valuations in the last year. So after weathering the stormy seas of a post-pandemic world, it’s only natural to secure some loot.
And people like Warren Buffet are very patient at allocating their capital. It might be similar to hunting unicorns in a field of horses. Only a rare breed of a company or a tempting stock price can make them allocate their well-earned capital.
Final thoughts
People like Bezos have always been a step ahead, whether in e-commerce, space, or personal wealth management. And we’re left to wonder what do the rich know that we don’t.
They know plenty, but it doesn’t need to be some catastrophic outcome to get them to cash in their assets after such a juicy 2023.
Remember, the stock market is at an all-time high. It’s only natural to want to get some good ROI.
And for all of us still in the dark, just keep in the game.
Time in the market beats timing the market.
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