Corporate Insiders Selling Shares as Liquidity Evaporates | Follow the Money

Rising interest rates can negatively impact high risk assets, such as stocks and high-yield bonds, because they can decrease the price of these assets. This is because when interest rates rise, newly issued bonds will have higher coupons, making older bonds with lower coupons less valuable. Investors may sell off their high risk assets to buy the newer, higher yielding bonds, causing the price of high risk assets to drop.

The higher the perceived risk in the asset, the faster investors will sell. This is why we saw crypto and growth stocks sell off first as interest rates began to rise.

One historical example of this happening is the stock market crash of 1987, also known as Black Monday. On October 19, 1987, the Dow Jones Industrial Average dropped 22.6%, its largest one-day percentage decline at the time. Many factors contributed to the crash, including concerns about rising interest rates and an overvalued stock market. As interest rates rose, investors sold off their stocks and moved their money into safer investments, such as bonds, causing the stock market to plummet.

TOPICS AND TIMESTAMPS:
The Stock Sell-Off 0:00
The Status In 2023 8:18

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