Terry Smith: Investing Beyond the Headlines: Using Company Data for Economic Insights

Johnny HopkinsTerry SmithLeave a Comment

In this interview with the Money Maze Podcast, Terry Smith discussed some of his unconventional approaches to macro investing.

His key points are:

  • He invests in companies and considers macro factors, but company data is seen as more insightful than traditional statistics like CPI or GDP
  • Payment processors like Visa and Mastercard offer valuable economic insights by revealing spending trends and payment preferences (debit vs. credit)
  • Company data can be more accurate than official statistics, as shown by a study using grocery store footfall and mobile SIM card data to estimate UK immigration
  • While this data informs his overall perspective, it doesn’t directly drive his individual investment decisions

Here’s an excerpt from the interview:

Smith: And so we invest in companies in the end, and we do think about macro. Look we absorb an awful lot of stuff from companies over time and that does inform us.

When we’re talking about inflation for example, which obviously is the subject du jour, as it were, or recession which of course might be the subject of tomorrow I suspect, because it could be, couldn’t it?

We always say it’s interesting how people look at statistics like the CPI and they look at the GDP and so on.

How about looking at some of the company statistics?

I mean one of the things that can tell you quite a lot about an economy is the payment processes.

What are Visa and MasterCard, what I tell you is going on?

Are the payment processes going up? Going down? How much are they going up?

Are people using debit, or are they using credit?

Because it quite often tells you, it informs you a great deal.

I remember when one of the many controversies about the size of immigration in the UK was going on in the last few years, not whether it should be allowed, or what to do about it, but just how much was it.

If you might recall the government was saying tens of thousands, turned out to be hundreds of thousands, somebody did a good piece of research which looked at the data you could get on footfall through retail grocery outlets.

So Tesco Sainsbury, ASDA, Lidl, Aldi, Morrisons etc. So what was the footfall across them and what was the number of operating mobile phone SIM cards out there.

And they looked at it and went, “No the population is going up by half a million a year.”

And it was!

There’s an awful lot of good data that companies get out there that can inform you about macro that we think quite often gets ignored.

And we’re kind of interested in it basically. But it doesn’t really drive the investment decision.

I don’t sit there and think I know what’s going to happen in macro and as a result I’m going to do this or that, because first of all I don’t know what’s going to happen in macro, and secondly that’s not what I invest in.

You can watch the entire discussion here:

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