Should you invest by following when insiders buy? It's not a stock market, it's a market of stocks, Inflation report comes in better than expected, You may be getting a larger tax refund & More

Should you invest by following when insiders buy?

It sounds like it’s an easy thing. Just do what the insiders do because they obviously know the company well and if the stock were to drop in value and the insiders commit to purchasing shares, it must be a smart investment. Unfortunately, it’s not that easy and there are many other factors involved. Data also shows that longer term it may not even matter. Over my 45 years of doing this, I have even seen sometimes where they borrow money from the company to actually do the purchase of the shares. With that said when they are committing their own money, does the stock do well afterwards? The Wall Street Journal did an analysis of 1,400 publicly disclosed insider purchases using S&P 500 companies. Going back to 2020, they discovered insiders at 327 companies had a total of $3.7 billion in stock trades over $100,000. Most of the purchases were completed after a decline from the previous 30 days and produced a median gain of about 2% a month later but then began to decline after that. The numbers also showed that only 15% of the purchases fully recovered from where they had fallen in the previous 30 days before the share purchase. It should also be noted that they cannot act on insider information, so if there’s something major that can move the stock either up or down, they would probably go to jail if they were to act upon it. In other words, since they can’t act upon insider information, they don’t have much of an advantage over someone doing a good amount of research about the company.

It's not a stock market, it's a market of stocks

I have often made this claim when things get crazy in the stock market. What I mean by this is you don't just have to buy the stock market and instead can look for good companies within the market. The reason this is so important to understand is because individual stocks can still do well even when the broader market struggles, especially when the market gets heavily concentrated like it is today. I often reference the tech boom and bust as an example investors should study and in times like this, I believe it is even more applicable. From the tech-stock peak on March 27th, 2000, through the end of that year, the S&P 500 fell 13.4%. It is important to remember that the S&P 500 is a market-cap weighted index, which means the larger the company the more it makes up of the index. If we instead look at the equal-weighted S&P 500, where every company has essentially the same weighting, it actually gained 10.7% from March 27^th through the end of 2000. Looking at specific sectors during that period, utilities, healthcare, and consumer staples were actually up about 40% to 45%, while tech fell 51.8%. It has been nice for many investors to enjoy the easy ride in the S&P 500 for the last decade plus, but I continue to believe that over the next 10 years the returns will be much more subdued in the index than investors have become accustomed to. 

Inflation report comes in better than expected

The Consumer Price Index, also known as CPI, showed headline January inflation was just 2.4%. This compares to an estimate of 2.5% and last month's reading of 2.7%. Core CPI, which excludes food and energy, came in line with expectations at 2.5%, but it was also lower than December's reading of 2.6% and the smallest increase since March 2021 when it climbed by just 1.6%. Food prices put a little pressure on the headline number as they were up 2.9% compared to last year. Most of this came from food away from home where prices were up 4.0%. Food at home on the other hand only saw prices climb 2.1%. Energy prices helped the headline number as prices declined 0.1% as gasoline prices fell 7.3%. Offsetting this benefit was utility prices where electricity was up 6.3% and utility gas service was up 9.8%. Many other areas saw muted price changes, and shelter continued to add pressure to both the headline and core CPI numbers. Even though the annual rate of 3.0% was lower than December's level of 3.2%, it is still above both the headline and core numbers. As a reminder, this is a huge weight at around 34-35% of headline CPI and over 40% of core CPI. If all else remains the same and shelter declines this year, I believe we could see that 2% target achieved. I was surprised to learn the Owner's Equivalent Rent (OER), which essentially measures the rate homeowners believe they could rent their house out for, carries most of the weight at over 70% of the shelter category. In January, the OER was up 3.3% while the actual rent of primary residence category was only up 2.8%. 

Financial Planning: You May Be Receiving a Larger Refund

New tax rules could help many filers see larger refunds this year, with some benefits happening automatically and others requiring careful reporting. The standard deduction increased for everyone, with taxpayers aged 65 or older receiving an additional $6,000 boost. The state and local tax (SALT) cap rose from $10,000 to $40,000 for those who itemize, and the child tax credit increased by $200, from $2,000 to $2,200. These automatic changes may lower tax liability without any special reporting. However, other deductions such as those for auto loan interest, overtime pay, and tip income must be properly reported to receive the full benefit. Taxpayers should review their returns carefully to ensure all available deductions and credits are captured. If a larger refund does show up, it may be a good time to update 2026 withholding elections to increase monthly take-home pay instead of waiting all year for next year’s refund.

Do unions help or hurt the economy?

Over the years unions have done many good things for workers by improving working conditions and making sure they get a fair working wage. The first strike was in 1768 when journeyman tailors organized a strike to protest wage reductions. It was not until 1794 that the first organized union was founded in Philadelphia. It was called the Federal Society of Journeymen Cordwainers, also known as shoemakers. However, nowadays, I’m not convinced that unions are helping our economy and individuals. I point to the delivery company UPS, which reached a five-year labor agreement with the International Brotherhood of Teamsters in 2023. It has really put a heavy strain on the company because the average full-time driver now makes $170,000 in annual pay and benefits. When you compare that to the average annual pay in the United States of $66,622, it seems excessive. The problem is the company now has to pay out this large amount to the drivers, and they can’t increase what they charge consumers to cover the extra cost. UPS had to scale back their business with Amazon because the high-volume business was not profitable. This has led to the elimination of 48,000 operational positions in 2025 and the shutdown of 90 buildings that also put other people out of work. To stay in business and remain profitable they are cutting an additional 30,000 jobs in 2026 and shutting down another 24 buildings in the first six months of 2026. I really wish the unions would work with management and dig into financial statements to understand profits, sales, and competition. Sometimes the added burden of higher pay can cause a business to reduce the workforce and sometimes if it is excessive, it could cause a company to eventually go out of business. When that happens, there really is no one that wins. The employees lose and the shareholders lose as well.

More relief coming for inflation?

The national median rent for apartments fell 1.4% in the month of January to $1,353. This was the largest annual drop since September 2023 and the lowest January rent since 2022. Rents are now 6.2% below the peak in the summer of 2022. Will rent continue to decline? I'm not sure about that, but any large increases seem extremely unlikely. The Apartment List's index, which dates back to 2017, shows vacancy rates are at a record high of 7.3% and units are taking an average of 41 days to get leased. This is four more days than January 2025 and another high for the index. With large vacancies and less demand, apartments will have a hard time raising prices and may need to consider lower rent levels or more concessions to attract tenants. This also pairs with supply that continues to come online and could pressure rent prices even further. Austin, Texas has really struggled as the median rent fell 6.3% compared to last year. New Orleans, San Antonio, Tucson, and Denver were other areas that had soft rental markets. Just because the median rent across the country fell does not mean all cities saw a similar story. In fact, Virginia Beach saw the fastest rent growth at 5%. It was followed by San Jose, San Francisco, and Chicago. This lack of price growth should continue to benefit the inflation reports considering the fact that shelter costs are such a large component. Lower rent prices should also help with single-family rent prices and home prices as a whole considering the competition from the lower priced alternative you can find by living in an apartment. 

Can the US and Chinese economies grow without each other?

Both the United States and Chinese economies are trying to reduce their reliance on one another. China since early 2024 has spent almost $1 trillion to be self-sufficient in agriculture, energy and semiconductors. These are products that the United States would supply to China and in return we would be purchasing many low-cost goods for American consumers to buy. Unfortunately, over time the trade balance got way out of whack to where we were giving them far more money for their goods than they were giving us. China has worked hard to export to other countries around the world and even though China's share of U.S. imports dropped to roughly 7.5% by late 2025, China still had a record annual trade surplus of $1.2 trillion in 2025. China's share of US imports reverses roughly 20 years of growth and follows some years when that share was over 20%. To reduce reliance on China, the United States has been using other countries in Southeast Asia to purchase goods and has been successful at producing such things as plastics domestically. Unfortunately, goods that include electronics and other small components have been more difficult. There will probably be pain felt on both sides but I believe the United States will prevail over China in the long run.

Retail sales show the consumer may be slowing

The headlines make the news seem worse than reality, but I'd say the data was still disappointing for December retail sales. Headlines indicated sales were flat and well short of the estimate of 0.4%, but this is looking month over month and when we look at the annual gain of 2.4%, I believe it tells a better story. 2.4% isn't setting the world on fire, but there were some questions as to whether or not there was some pull forward in spending early on in the holiday season. If we look at the period of October 2025 through the end of the year, sales showed a more impressive gain of 3.0% compared to the prior year. For all of 2025, sales were up an impressive 3.7%. Looking again just at the month of December, nonstore retailers were strong as sales saw a gain of 5.3%, food services and drinking places climbed 4.7%, and healthcare and personal care stores were up 6.4%. The only major categories that saw declines on an annual basis were furniture and home furnishing stores, where sales were down 5.6%, and motor vehicle and parts dealers, where sales fell 1.1%. While again the report wasn't as bad as the headlines made it seem, it does indicate that the consumer is worth watching in the coming months. My belief is that we will still see good growth in 2026 and that the negatives in this report likely stem from a pull forward in spending earlier in the holiday season. 

The Jobs Report was worth the wait

With the recent government shutdown, the January Jobs Report was delayed a few days, but the numbers looked quite strong. Headline nonfarm payrolls increased by 130k, which was well above the estimate of just 55k. The unemployment rate of 4.3% also compared favorably to its estimate of 4.4% and wage growth of 3.7% came in line with expectations. Healthcare and social assistance continued to lead the charge as the sectors added 82k jobs and 42k jobs respectively. Construction was also extremely strong with a gain of 33k jobs in the month. Government employment was the major headwind as payrolls declined by 34k. Since the peak employment in October 2024, federal government employment is down 10.9% or 327k jobs. Many of the other sectors showed little change in the month, but financial activities employment was also a laggard with a decline of 22k jobs in the month. Even though many sectors were muted in the month, I'd still say this is positive news considering all the concerns around the labor market. With the likelihood of declines slowing in the federal government and more clarity around deportations and tariffs this year, I believe we should see more stability in the labor market. I don't believe we will see a major boom in hiring at this point, but considering payroll gains averaged just 15k in 2025, I wouldn't be surprised to see stronger numbers in 2026.

Everyday consumers could be impacted by large datacenters

Outside of the amount of space these datacenters are occupying, the impact on electricity prices should remain a concern for the everyday consumer. Electricity prices climbed 6.9% in 2025, which was more than double the headline inflation rate of 2.9%. Analysts at Goldman Sachs point out that they believe prices will continue to rise through the end of the decade and households will see an additional 6% increase through 2027. I worry this estimate may even be conservative considering data centers are estimated to make up 40% of electricity demand growth through the end of the decade, and I don't believe we have the infrastructure in place to handle this kind of expansion. While we know the demand side of the equation is increasing, the supply part is problematic. Electricity supply remains constrained due to regulatory hurdles and a shortage in labor and materials that make it hard to build new power plants. This likely means utilities will need to spend more on infrastructure, which will lead to more costs being pushed onto consumers. There have been discussions about these hyperscalers paying a different rate than consumers, which may need to be a necessary outcome. If this were to occur, it does make me question how profitable this AI buildout will be for companies like Microsoft, Amazon, and Meta. Not only will they be faced with higher utility costs, but they have been raising debt, which will add to the interest expense, and we have discussed the impact of depreciation expense with these massive capital expenditure budgets. While many remain optimistic about the AI buildout, I continue to have my reservations.