Internal personnel of American companies are accelerating their "bottom fishing" strategy. Is it time to get on board with the US stock market?

The embattled bullish in the U.S. stock market received encouraging signals from insiders at companies. As the S&P 500 index fell in March, corporate insiders bought their own company's stocks at the fastest pace in 16 months, and after President Donald Trump's introduction of global tariff measures triggered an accelerated decline in the stock market, corporate insiders continued to buy stocks rapidly. Data compiled by Washington Service shows that in the first two weeks of March, about 180 companies' insiders bought their own company's stocks, bringing the buy/sell ratio to 0.40, close to the highest level since the end of 2023. Although the reasons for corporate executives buying stocks are usually unrelated to market performance, the increase in buying volume indicates their confidence in the company, which reassures investors who have been battered by weeks of selling. Ratio of buying/selling by U.S. corporate insiders Matt Lloyd, Chief Investment Strategist at Advisors Asset Management, said, "This is a positive signal. Given the uncertainty in trade and the economy, investors are still stuck in a negative feedback loop. Therefore, as the stock market tries to stabilize, the continuation of this trend is crucial." The increasing optimism among corporate executives contrasts sharply with the widespread risk-off sentiment. Investors' outlook on the economy has reached the most pessimistic level in thirty years. Global fund managers are also pessimistic about future prospects, with 82% of respondents in a monthly global survey by Bank of America expecting a global economic downturn. The survey shows that the number of respondents intending to reduce their exposure to U.S. stocks is at a historic high. The global trade war and potential economic downturn could exacerbate inflation risks in the United States. Therefore, Adam Phillips, Managing Director of EP Wealth Advisors' portfolio strategy, is cautious about the trend of corporate insiders buying stocks. Phillips said, "Like many other companies, many of these companies are blind when waiting for trade policy clarity." Is it time to buy U.S. stocks at a low point? The buying and selling of corporate executives can provide clues to market trends. The buy/sell ratio of insiders surged in August 2015 and at the end of 2018, with the former occurring before the market bottomed out and the latter coinciding with the market bottoming out. In March 2020, corporate insiders' buying accurately predicted the bottom of the bear market. Historically, the number of sellers has exceeded the number of buyers, as executives often see their stocks as a source of cash. Earlier this year, corporate insiders seized the opportunity for a stock market pullback before the S&P 500 index peaked in mid-February. For most of January, they sold their company's stocks at an unprecedented pace, then reversed this trend in the final days of the month. According to Bank of America, cash levels have seen the largest two-month increase since the outbreak of the pandemic, which could be a good sign for the stock market as market sentiment improves. Their funds can be used to buy stocks, and Patrick Armstrong, Chief Investment Officer at Plurimi Wealth, believes now is the time to build stock exposure. Armstrong said, "The widespread buying of stocks by insiders, the continuous increase in cash levels, and the extremely pessimistic market sentiment are early indicators that the market sell-off is making stocks more attractive."