Potential stock market volatility is a concern for 45% of retail investors, according to a recent FTSE Russell study. Amid volatility, it’s easy to get swept away by emotions like fear of missing out (FOMO). Retail investors have to navigate a rush of panic-based selling recommendations and “buy it now” stocks.

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However, they can find solace in a surprising area: insider trading data.

While insider trading might seem like a dirty phrase, that’s not always the case. Analyzing public transaction data made by industry insiders is legal—and an excellent way to navigate volatile markets.

The decision-making challenges facing retail investors

The biggest challenge for retail investors during volatility is separating hype and fear from fact.

When markets are volatile, retail investors often face conflicting recommendations. These can come from friends, family, financial influencers, and news outlets. Unfortunately, much of this “advice” may be based more on emotion and herd mentality.

Investors may not know which recommendations to trust without access to high-quality data. This can lead to knee-jerk reactions.

As a result, retail investors can make impulsive decisions they may regret later, like panic selling. Many people experienced this when they sold during the 2008 financial crisis. As the market recovered over the next few years, those who sold missed out.

On the other hand, FOMO can lead to purchases that don’t match investors’ goals or live up to the hype. Look no further than the infamous GameStop surge in 2021 as an example.

What investors need is insights based on solid data and an understanding of the market. This is where full-time professionals and financial institutions typically have the upper hand.

Insider moves that signaled shifts in the market

Professional and institutional investors often seem able to see the future and understand what’s actually going on in the markets.

To illustrate this point, let’s look at a few instances where Warren Buffett via Berkshire Hathaway went against popular opinion and profited:

• He invested in AmEx in the 1960s despite the salad oil scandal. He then held the stock during the COVID-19 pandemic, when many investors sold.

• He purchased over 1 million GEICO shares in 1976 while the company faced possible bankruptcy.

• He invested heavily in Coca-Cola shortly after the market crash of 1987.