Daily Commentary

MarketMinder’s View: As this research piece mentions several specific companies, please note MarketMinder doesn’t make individual security recommendations, and our interest is in the broader theme only. Whenever corporate insiders (e.g., an officer, director, 10% stockholder, etc.) decide to buy or sell their own stock, many investors presume they are acting on some foolproof forecast of the company’s future, good or bad. So if insiders are buying, it must be a good time to buy indeed. And if they are selling, it must be time for Joe and Jane Public to scram. Now, setting aside the fact that SEC-defined insiders can purchase company stock only during designated window periods and have to go through several regulatory processes before they can buy, does insider buying actually say anything about the stock’s future direction? This thorough analysis found mixed results. Based on 1,400 publicly disclosed insider purchases at S&P 500 companies over the past five years, “Most purchases took place after the share price had declined over the previous 30 days, often after disappointing results or other negative news. In such instances, executives and directors often buy shares in clusters to amplify their vote of confidence in the strategy—as they did in a quarter of the trades analyzed, according to the Verity data. The move generally works—to a point. Share prices climbed a median 2% a month after the insider purchases, but their recoveries tended to taper off after that. Just 15% fully rebounded from where they had fallen in the 30 days before the share purchase.” Now, the timeframes used here are very short—we don’t recommend investors focus on 30-day performance windows—but the broader point still stands: Insiders don’t have the inside track on a stock price’s future direction. And we would add that their decisions are all widely known and priced in. For more on this topic, see our 2020 commentary, “Don’t Let Insider Sales Lead You Astray.”

MarketMinder’s View: Often in trade, when one door closes, another opens. In this case: “Deliveries of Russian crude into Indian ports continued to fall last month, dropping to about 1.12 million barrels a day from 1.2 million in December, to leave the January import figure at the lowest since November 2022. ...The hurdles facing exporters could soon get even higher, if India follows through on an apparent deal with the US, potentially imperiling the Kremlin’s war chest. That accord would see Washington slash import tariffs on Indian goods, while New Delhi would, among other things, halt purchases of Moscow’s crude, according to President Donald Trump’s interpretation.” Yet as the chart here shows, Russia’s seaborne crude shipments have been remarkably stable since 2022’s Ukraine invasion despite years of seemingly escalating sanctions. One reason: Unlike India’s, the US’s trade deal with China didn’t come with conditions for the Middle Kingdom to halt its Russian oil imports. Hence, “The drop in flows to India has been offset by an increase in the amount being delivered to China,” further evidence that tariffs, sanctions and other trade barriers often end up just redirecting trade. This doesn’t mean they are beneficial or harmless—these barriers make doing business more difficult and expensive—but they don’t cease commerce altogether. For another salient example, consider: As Venezuelan oil shipments stop heading to China, the Trump administration is now talking them up for India. We won’t speak to the geopolitical implications, but from an investment perspective, markets focus most on the economic ramifications and the reality here is that ostensibly big trade disruptions have turned out far less destabilizing than expected. The lesson for investors: Markets are more adaptable than many imagine.

MarketMinder’s View: Two standard disclosures upfront: First, MarketMinder is politically agnostic and doesn’t favor one party or politician over another. Second, since this piece refers to several specific companies, we also don’t make any individual security recommendations and are sharing this to highlight some broader themes. For example, presidents aren’t all-powerful. One of the stated aims of the Trump administration’s tariffs is to reshore and restore manufacturing (and, by extension, jobs) in America. While the jury is still out over the long term, the short-term effects have been limited. “Manufacturers shed workers in each of the eight months after Trump unveiled ‘Liberation Day’ tariffs, according to federal figures, extending a contraction that has seen more than 200,000 roles disappear since 2023.” Now, that doesn’t mean manufacturing activity has dried up. The article cites some signs of stabilization, including an uptick in January PMI’s new orders, though it is worth putting this in perspective: “The gradual slowdown is in some ways a continuation of decadeslong trends that pulled factory jobs overseas and helped empty out Midwestern cities. In an industry where capital plans and construction timelines extend years into the future, turnarounds also don’t happen overnight.” No government policy, including tariffs, was likely to reverse this development, and in the short run, these levies raised many companies’ costs and stoked some uncertainty—hurting businesses more than helping. That said, firms have also adapted, helping blunt tariffs’ worst-case effects, which shows they aren’t necessarily make-or-break for the economy, either. The business cycle matters much more—and presidents’ influence on that, as we are seeing, is vastly overrated.