The so-called “Mag 7” stocks: Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla—have been a staple in investors’ portfolios, driven by impressive market caps and growth. But here’s the kicker: Not a single insider has been buying shares for a long time. In fact, all we’ve seen are insider sells. To put it bluntly: not one executive is buying into the current dip. This speaks volumes about how even the insiders—those with the most knowledge about these companies—aren’t confident in the outlook.
The only time there was an insider buy recently was Jeff Bezos purchasing one share of Amazon. One share. It’s almost laughable. You’d expect at least some execs to put their money where their mouth is if they really believed in the long-term growth of their companies. But no, it’s nothing but selling. If that doesn’t raise a flag, I don’t know what will.
Apple, for example, has been cutting its net cash level nearly in half over the last four years. Now it’s down to just $46 billion. That’s barely 1.2% of Apple’s market cap which is next to nothing when you consider how much the company has spent on stock buybacks. They’ve spent $110 billion on buybacks just last year. The catch? That was only about 3% of their total market value. Sure, these buybacks might prop up the stock temporarily, but look at what happened in the 2022 selloff. It barely made a dent.
The truth is, Apple’s cash reserves aren’t looking as strong as they used to, and at some point, they’ll have no choice but to scale back the buybacks. This kind of financial maneuvering isn’t sustainable forever. Look at what happened to Nokia during its peak. They pumped billions into buybacks, and it worked until it didn’t. The same thing is bound to happen with Apple sooner or later.
In the grand scheme of things, this kind of corporate behavior is a warning sign. When companies focus more on propping up their stock price with buybacks than on actual growth, it’s time to reconsider. And when insiders aren’t buying their own stock? That’s a big clue that something might be wrong.
President Trump recently criticized the $52 billion semiconductor subsidy program, the Chips Act, calling it “a horrible, horrible thing.” The program, which has already triggered over $400 billion in investments from companies like Taiwan Semiconductor Manufacturing Co. and Intel, has been one of the biggest pushes in U.S. industrial policy in recent years. But Trump isn’t having it.
He called on U.S. House Speaker Mike Johnson to scrap the Chips Act and use the funds for something more pressing, like reducing the national debt. The irony here is that the government is pouring billions into the semiconductor industry while the national debt spirals out of control. Trump’s words resonate with the idea that we’re wasting resources on corporate subsidies that don’t solve the bigger issue of fiscal responsibility.
Interestingly, while Trump’s stance is controversial, it’s not totally off-base. The Chips Act was designed to reduce America’s reliance on Asian semiconductor manufacturing, especially from China. The act allocated $39 billion in grants and loans, plus hefty tax breaks, to encourage chip production on U.S. soil. On paper, this seems like a step in the right direction for national security and economic independence. But in practice? It’s another example of government spending on grand schemes that may or may not pay off in the long run.
Trump’s prime-time address and the applause that followed underscore a growing frustration with the Chips Act—especially from lawmakers like Vice President JD Vance, whose state of Ohio received major benefits from the legislation. Some may argue the Chips Act is necessary for national security, but the fact remains that the U.S. government is throwing money at companies that don’t necessarily need it, while neglecting more urgent issues like our unsustainable debt.
In the end, both the tech sector and Washington need to rethink their strategies. If companies aren’t investing in their own stock and the government is pumping money into questionable subsidies, there’s something off in the system. With the economy teetering on the edge, we need to ask ourselves: Are we really setting ourselves up for long-term success, or just short-term Band-Aids?
Sources:
https://x.com/Mr_Derivatives/status/1897270520653209858