At Avory we wanted to share a broader take on our traditional Investing with Data Newsletter to incorporate a larger swath of datasets that drive our views. One thing is clear—macro is driving the narrative right now.
I’ll start with some market-oriented data points before moving into broader macro trends.
Here is the summary if you want just that:
Tech insiders are buying at record levels, signaling confidence despite market volatility.
Market timing is a losing game—missing just 10 key days per year can turn a +12% return into a -10% loss.
Sentiment is at crisis levels, historically a bullish setup for strong forward returns.
Forced liquidations, not fundamentals, are driving this sell-off, creating temporary dislocations.
Inflation is running lower than feared, while consumer spending remains stable, contradicting recession worries.
Tech Insiders Are Buying—What Do They See?
Corporate insiders in the technology sector are buying their own shares at a pace we’ve never seen before. While we don’t know every individual reason, a bottom-up perspective tells us that fundamentals remain strong, demand is persistent, and valuations in mid-to-small-cap tech are attractive.
Our view that the demand for technology is strong aligns with data from the Bloomberg Intelligence CIO software survey, which shows that over 93% of CIOs expect to maintain or increase their software budgets in 2025. Despite broader economic concerns, technology spending remains resilient, reinforcing the case for long-term investment in the sector. Keep in mind technology is becoming pervasive across sectors, and remains the largest weight.
Market Timing is a Losing Strategy
Stepping away from just technology and software, the bigger question for investors is this—are you an investor, using the market as a vehicle to own great companies, or are you a trader, trying to speculate on the next short-term move? If you’re in the first camp, the data overwhelmingly supports staying invested. Looking at the past decade, if an investor missed just the 10 best days of each year, their annualized return would collapse from +12% to -10%. This spread is enormous and highlights why trying to time the market is a losing game. The biggest up days tend to follow sharp sell-offs, and missing those days can completely erase long-term gains.
Volatility is Normal—Even if it Doesn’t Feel Like It
This market turbulence might feel extreme, but historically, 5-15% moves happen every single year.
The average annual drawdown is around 13%, yet markets have continued to produce strong long-term returns. Investors often react emotionally to these drawdowns, but zooming out shows that these moves are just part of the investing cycle.
Even in individual stocks, this pattern holds true. Looking at Amazon—a stock that has returned over 40,000%—the average annual drawdown has been 33%, with multiple drops of 70-90% along the way. The key takeaway is that market returns are not linear. They happen in a staircase pattern—drawdowns occur, but over time, for fundamentally strong businesses, they are met with new highs.
Sentiment is at Crisis Levels—A Contrarian Buy Signal
Investor sentiment is in the gutter. There is very little data suggesting optimism, and most of the indicators we track show levels of pessimism only seen during extreme economic crises. The AAII Investor Sentiment Survey is overwhelmingly bearish, matching readings last seen during COVID and the 2008 financial crisis.
Other fear-based indices, like the NDR Sentiment Composite, show similar extremes. Historically, when sentiment is this negative, markets tend to outperform over the next 6-18 months, with an average return of +27.5% following these conditions.
Technical Selling vs. Fundamental Reality
Sentiment alone doesn’t move markets—flows do. And right now, what seems like forced liquidations are driving price action rather than fundamental deterioration. Institutional data shows massive liquidations, especially from hedge funds reducing exposure, which suggests this is more of a technical sell-off than one purely based on earnings or economic shifts. These types of liquidations create temporary price dislocations, but historically, they don’t last. Once the selling pressure eases, the strongest companies tend to recover quickly.
Consumer Discretionary vs. Staples—A Sign of Overreaction?
Another signal of panic? The 15-17% drop in discretionary stocks relative to staples. Moves of this magnitude typically only happen during major economic downturns. The key point here is that these kinds of shifts usually occur when the economic pain is already happening—not this far ahead of it. This suggests that the market is reacting to fear rather than reflecting actual economic deterioration. While I get it that tariffs, immigration, fed, DOGE, and rates create uncertainty, we are suggesting that downside risks to these seem priced in the areas which would be most impacted.
Small Caps and Crypto Are Seeing Extreme Selling
Small caps have been down six straight weeks, the longest losing streak on record…
…while put volume has surged to record highs—clear evidence of extreme bearish positioning…
At the same time, crypto is seeing record outflows, reinforcing the idea that investors are fleeing perceived risk assets across the board. Historically, selling pressure like this has led to sharp rebounds once liquidity stabilizes.
The Bond Market is Not Signaling Recession
If the economy were truly in trouble, we would see it in the bond market first. But right now, credit spreads remain tight (shown in white), indicating that bond investors don’t see major economic distress. 5 day rate of change and 60 day, have not budged much either.
Financial conditions remain loose, a key indicator of liquidity stress, and they are not signaling an imminent credit crunch. Stock markets react emotionally, but the bond market tends to be more fundamentally driven—and right now, it’s not panicking.
We can also look at Financial stress indicator also suggests that financial factors remain in good standing at the moment.
Inflation is Lower Than the Narrative Suggests
We’ve been vocal about the flaws in CPI and even PCE data. A real-time measure of inflation, like Truflation, currently shows inflation running at just 1.3%, well below the Fed’s 2% target.
Even if we rely on official government data but adjust for how real estate is calculated, inflation still looks contained. This raises the question—why is the market still pricing in significant inflation risks when the data suggests otherwise?
Consumer Spending Data Contradicts the Sentiment Collapse
One of the biggest recent headlines was the Michigan Consumer Sentiment Report, which showed a major drop. But the problem is that when you break the data down by political party, you see a massive divergence. Consumer sentiment has become highly political, which means the headline number may be misleading.
Meanwhile, actual consumer spending data from Bank of America credit/debit transactions shows no major slowdown, directly contradicting the pessimistic sentiment data.
Data reading “Consumer spending started 2025 on solid footing, following a strong end-of-year performance in 2024. Spending per household was up 1.9% year-over-year (YoY) in January, following the 2.2% YoY rise in December”
How about Bank of America Small Business Data?
Data shows an improving financial picture…
If you want you can hear from CEO of Bank of America. Watch here
The February jobs report was balanced—155,000 jobs added, spread across sectors. With employment near historic lows, a gradual slowdown is expected. This is a Goldilocks report—steady job growth without overheating, giving the Fed room to stay on track with rate cuts.
Here are some thoughts on tariffs. First we stand in the camp that this is more of a negotiation tool. This view is based on how they were used in the first administration along with recent and persistent changes based on what the other countries provide. Second, the record trade deficit in December and January reflects companies front-running tariffs, stocking up on goods. Instead of inflation, this oversupply could actually be deflationary if demand softens. Either way with stocking taking place, the actual impacts will likely be delayed, giving the admin time to negotiate before it meaningfully hits the economy.
Volatility Sets Up Strong Forward Returns
Sharp market swings—alternating 1% up and down days—typically precede strong long-term returns. History shows that periods of elevated volatility have led to some of the best market buying or even holding opportunities. If the economy is stable, which is our base case based on both top-down and bottom-up data, then forward returns from here could be strong. We have been rotating so buying weakness by using strength.
With $7T in money market funds, there is plenty of pent up demand for equity assets. Rates migrating lower will likely be the driver.
Conclusion
I have about 20 more charts, but I will spare you. Volatility is never fun, but it is normal, and the historical data confirms it. The way we responded? We used this sell-off to buy. We took profits in some of our winners that didn’t lose us any money and rotated into four new companies while also adding to some of our biggest losers—setting up for a sharper rebound once sentiment normalizes.
About Avory & Co.
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Avory specializes in high-conviction equity strategies, emphasizing Secular Growth and Transformation Stories driven by exceptional teams. Data guides decisions. We cater to high net worth investors, family offices, and institutional investors. Note: This information doesn't constitute a recommendation to buy or sell any mentioned securities. Avory is based in Miami, Florida with clients all across the globe.
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