In recent elections (in the US and UK), betting markets have proven to be a more accurate guide than polls. There is an important lesson here for investors I’m looking for stocks to buy.

Obviously unrelated, what corporate insiders do with their stakes in the companies they run is valuable information. And I think it’s easy to overlook that. I will explain the connection between these two points later.

Actions and elections

Anyone wanting to predict the outcome of this year’s US or UK elections should have looked at the bets being made. You see, the bookmakers seemed to be paying more attention than the pollsters.

There are several reasons for this. But the simple thing is that what people do is usually a better indication of what they think than what they say.

People who bet on the outcome of an election are putting their own money on the line. This means they have no incentive to support anything other than what they think will happen.

This is where the link to the sotck exchange Business executives sometimes use their own money to buy stock in the companies they run. And when it does, it can be a very positive sign.

Leaders are usually able to know their own business better than anyone else. But they have virtually no incentive to invest in its stock unless they think it’s a good idea.

This year’s elections showed me that commentators should pay more attention to betting markets. And I think something similar might be true for investors resorting to insider buying.

An example of the FTSE 100

Vistry (LSE:VTY) is a good example. The company is currently in a very complicated situation, with its share price having fallen 45% in the last six months.

There are several reasons for this. These include the increase in budget stamp duty, an investigation into anti-competitive practices and cost errors in one of its divisions.

These are all risks, but there are also reasons to be positive. Coupled with the stock being much cheaper than it was, the government is aiming to build more homes and interest rates are falling.

Investors’ job is to determine what the price of Vistry stock should be, given these risks and opportunities. And it’s a real challenge.

One thing to note though is that US investment firm Browning West bought £3.7m worth of shares this month. Its chief investment officer is Usman Nabi, non-executive director of Vistry.

There are several reasons why this could have happened. But I can’t think of any that don’t involve some sort of positive take on Vistry’s prospects from someone inside the company.

think carefully

Vistry’s share price is already lower than it was when Browning West made its investment. In itself, this is enough to show that no one should buy stock just because someone else is buying it.

However, the fact that management buys shares in a company can be very positive. This is just one fact among many, but the recent elections made me think that it should not be underestimated.