I'm Pulling Back the Curtain on This Investment Strategy

by Andrew Zatlin February 10, 2023 1:00 pm ET

I'm often asked about my proprietary hiring data...

How it's different, how I calculate it, and what kind of investing advantage it brings to the table.

Today, I thought I'd give you a glimpse of this data in action...

And show you how we can use it to hunt down opportunities to profit.

For a transcript of this video, see below. This transcript has been lightly edited for length and clarity.

I'm Pulling Back the Curtain on This Investment Strategy

Let's talk about why, when it comes to investing, hiring matters.

Essentially, today's hiring is tomorrow's revenues. Companies have such strong lines of sight to their future revenue streams that they can make decisions right now, often months in advance of what's going to actually happen.

As such, today's hiring can be a proxy for knowing what earnings surprises might be out there or what sectors are set to either rise or fall.

Let me reveal what the latest data is forecasting...

My Approach vs. the Other Guys'

First though, understand this key point: Conventional data isn't granular. It doesn't reveal things at the company level.

Rather, this data has a broader focus, typically at the industry level. And that level can easily create a distorted view of the situation.

My data is different. I'm tracking hiring activity at the specific company level. I'm looking at 800 small-, medium-, and large-cap publicly traded companies. And I've been at this for 14 years, so I have a robust database.

That means I can spot when a company is slowing down, or when it's primed for growth. And I can reverse engineer what level of revenues these companies are going to pull in, based solely on their hiring activity.

Bottom line: Most data isn't worth much. Mine, in contrast, is strong, timely, and very valuable. Let me show you...

A Look at the Data

This chart below shows sectors that fall under the category of the Global Industry Classification Standard ("GICS"):

These are all familiar investment sectors, ranging from energy and utilities to health care and consumer staples.

I've taken my January data and compared it to last January. I've then ranked the sectors according to where my hiring data is showing the strongest growth. In this case, the consumer discretionary sector is growing the most, while information technology has the weakest growth.

Let's now compare these rankings with another key source: import data.

Import data is great because it tracks products and supplies that are coming in and will soon hit the shelves. That means imports also have a slight predictive quality to them.

According to the data I've singled out below, imports of telecommunications and computer accessories are down significantly:

Last year, for example, telecommunications equipment grew by 16%. But growth in December was just 3%. Similarly, growth for computer accessory imports was a marginal 6% for all of 2022 but contracted by 2% during the final month.

We see the same drop-off when looking at imports for medical equipment – a 4% contraction in 2022 – and pharmaceuticals – 11% growth for all of 2022, but zero growth in December.

Basically, my hiring data was already signaling to stay away from high tech and health care. And that notion was confirmed by import data. The thing is, I'm able to see this data earlier than other investors and act accordingly.

Now let's focus on the positives...

Where is the Growth?

If you recall, the strongest hiring growth is happening in the consumer discretionary, utilities, and energy sectors.

For example, imports of products like clothing and footwear were up 20% in 2022, including 8% growth in December.

But remember that I'm looking at data at the granular level. So just because consumer discretionary is doing well as a sector doesn't mean that every product is in demand. Import levels for things like TVs and furniture, for example, took a dive last year.

Energy is another fast-growing sector. And that's reflected in the enormous growth in imports for oil drilling equipment:

Import levels more than doubled in 2022 and were up 40% in December. Then there's the recent import increase for airplanes. I thought this was particularly interesting.

A boost in airplanes suggests that more people are traveling and that sectors like tourism and hospitality could boom in the near future.

In fact, the data on airplanes has me excited about a specific investment opportunity, a company whose stock is on the rise and still has plenty of room to climb.

If you're a "Pro" subscriber, I'll share the details on this opportunity. In the meantime, we're in it to win it. Zatlin out.