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Ed Butowsky of Chapwood Investments gives the Facebook founder some tips for his soon to be billions.
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To get out of the stock market and the -- -- with chop -- investments joins us now from Dallas.
And I know that's what you think you said do you talk to get out to believe you've written a -- -- -- -- -- that make you case yes.
Well real real simple there's not a lot of good things going on and an obvious to the jobs numbers are just you know horrific but more importantly when professional money managers and that's who really controls the market it's not UN I.
I'm in individuals its money managers that manage it big institutional pools of money when they look at the market what they see right now.
Our earnings coming in OK but interest rates are low so the acceptable PE and -- won't get too detailed but the acceptable.
Valuation.
Is really high when interest rates are low.
When interest rates start to creep higher on the ten year bond or ten year note that's what everyone needs to watch.
That's when valuations will drop Stuart what that means is watch the ten year note as -- creeps higher which it's starting to.
You're gonna see the valuations drop on stocks in the acceptable valuations basically you -- -- stock market drop at that point when you say the big institutions those big invest is that you wrote of that basically controlled not control they -- from the market than most important and that's right you writes if the little guy is out of the market.
The trading volume for little ordinary investors is way down isn't.
Yeah it's it's incredibly meet you really dissect the moves in the market.
9697%.
Of the volume comes from big institutions.
From program had not been literally program trading but trading on computers it's a very different game than what people think and what they look at.
Our valuations and if you see the ten year treasury move up.
Watch out I want you comment on on the the you know young mr.
as -- book.
Certainly because you deal with a lot of instantly wealthy young people athletes who come into a lot of money very -- Sutherland but this is a different gone.
-- this is guy's coming he's 27 is coming into what is it tests seventeen billion dollars all of a sudden that's right you.
You know keep you can't likened him to some of the people that you know I -- that a different kettle fascia.
Well -- actually the majority of my career is been around people just like mark because I I get involved with companies that go public so I've actually been involved in the situation many many times and we've actually taken I I've been involved without seven companies have gone public.
And the advice I give the CEOs of those companies in the in the the major shareholders -- this.
Set up a play and it's called ten B 51 plan before you go public so you can look.
Ironically in systematically sell stock every single day.
And that's when he should be doing because right now he's got a lot of money and it's all tied up in one company and I'd never advise anybody to manage their money that way so that's is that that's at ten B 51.
Plan and that allows you to gradually liquidate some of the stock that you've got in the company you created writes I'm.
That's right and the and you have to do that during a period where there isn't.
During a quiet period before you go public is the perfect time to do that so he should be setting that up I think people with 67 billion dollars on Paper.
And and have that dropped 95%.
Because they didn't set up a plan and -- stock prices drop what's gonna happen at FaceBook.
I don't know but right now this young man had a lot of money.
On Paper he needs to liquidate that and then he can feel very comfortable but -- -- liquidate that you know he's he needs to really put a plan -- place.
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