Image source: PixabayI often look for patterns. It seems like few people know this little hack to crisis investing.Last summer, I produced a podcast between Whitney Tilson, lead analyst for Stansberry Investment Advisory, and Porter Stansberry, the founder of Stansberry Research. The podcast episode centered on one theme: The best capital-efficient stocks to buy when the markets crash.The first episode focused on McDonald’s and what bonded its customers to the brand, such as its menu innovation, its best-in-class real estate portfolio, and its franchise model.The goal was to help give investors the knowledge and confidence so that when sharp downturns happen – you’d be ready to buy great companies at dirt-cheap prices. And today, I have another underappreciated name to buy if and when all hell breaks loose.

What Is a Financial Crisis?
Some people think a financial crisis is a sharp economic downturn. Others believe that it’s when investors stop paying lofty valuations. But the reality is that every recent financial crisis has been related to the plumbing of the financial sector: The ability to finance or refinance existing debt.More specifically, it’s known as a liquidity crisis. That’s when the financial system experiences a widespread shortage of cash or credit, disrupting economic activity and financial stability.Every major crisis of the last 16 years was a liquidity event. The 2008 Great Financial Crisis, the 2011-12 European Financial Crisis, the 2016 China Crisis, the 2018 Bond Crisis (Volmageddon), the COVID-19 pandemic crash, and the 2022 GILT Crisis in England. Liquidity crises can lead to debt spirals, deflation, and even depression. This is why the market relies on central banks as lenders of last resort to provide financial support to the system. Officials might say otherwise, but the entire financial system relies on backstops. It’s baked into the global debt system.Given that I anticipate another major crisis within the next three years, I want to show you where to look for clues that the bottom is in — and what to buy.

Listen to the Fed, Watch These Buyers
The easiest thing you can do is listen to the Federal Reserve for clues on what’s coming down the line. The Fed will use forward guidance to reduce worry and stabilize markets. However, the Fed’s actions—whether easing or providing support to the system with new policies—have fueled rebounds across markets after periods of shock.Listening to the Fed is one thing. Watching the real signal is another. When looking for a bottom in the market – we are watching the insiders.The chart below represents corporate executives’ collective buying versus selling over the last 16 years. See the peaks? That’s the blue line – the five-day moving average of buying to selling on an aggregate dollar amount. Those are the peak of crises in 2008, 2011, 2016, 2018, 2020, and 2022.The most intensive buying happens after accommodating shifts in monetary or fiscal policy from central banks and governments. As you can see, executives were extreme buyers during the peak of every major crisis that happened post-2008.

What to Buy When the Cannons Sound
When things are at their worst, when the market is getting hammered, when there’s nowhere to go, and everyone is screaming in fear, McDonald’s (MCD) is on my list of stocks to buy. So, too, are Meta (META), Amazon (AMZN), and Berkshire Hathaway (BRK-B).But at the top of my list is American International Group (AIG), the poster child of the 2008 financial crisis.American International Group is a global insurance company that insured an untold amount of collateralized mortgage loans. When the housing market collapsed, American International Group did as well, requiring a massive financial bailout from the U.S. government and central banking policies.That wasn’t the first time. Since 2008, American International’s stock has moved in lockstep with liquidity events and ensuing policy shifts. The following chart provides an image of the stock’s performance after periods of extremely high insider buying and accommodative shifts from central banks. So, why does American International stock surge when the Fed engages in quantitative easing? Because QE policy reduces the threat of default in the global financial system.So, the next time insiders buy at eye-popping levels (defying market sentiment) and the central bank announces some emergency policy – American International Group could be a screaming buy.More By This Author:Eyeing The Week Ahead
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