Fed Raises Rate, Insiders Calmly Wait

Last Wednesday, the Fed raised the federal funds rate by 75 basis points, reaching 3-3.25%, the highest rate since 2008. The Fed’s goal is to limit rising inflation with the goal over the next few years to get inflation down to 2%, the Fed’s inflation target. With rapidly rising rates the market is due for continuing turbulence. We wanted to look at what insiders are doing as a result.

Sentiment graph from insiderviz.com

What are insiders going to do from this? Probably nothing. As we can see in the graph, insiders have not been trading all that much in 2022. They already sold most of their gains at the end of 2021, as the markets peaked. So, insiders already hold a relatively low amount in their positions. Additionally, these rate hikes were always expected thus, their effects have already been priced into the market. There is always some volatility around rate changes, but it alone is not going to drive the market.

Now with high rates and high inflation, and soon to be higher unemployment, the market will likely continue on its downward trend. Insiders are happy to sit tight and wait out the storm with their high levels of cash. But, once insiders start to buy again, that is a great sign that things are looking up.