In this interview on the Money Maze podcast, Terry Smith talked about some of his unconventional approaches to macro investing.
His key points are:
- He invests in companies and considers macro factors, but believes company data is more insightful than traditional statistics such as CPI or GDP.
- Payment processors like Visa and Mastercard provide valuable financial insights by revealing your spending habits and payment preferences (debit vs. credit).
- Corporate data can be more accurate than official statistics, as shown in a study that used grocery store footfall and mobile SIM card data to estimate immigration in the UK.
- Although this data provides his overall perspective, it does not directly influence his personal investment decisions.
Below are excerpts from the interview.
Smith: So ultimately we invest in companies and we also think about macro. Look, we absorb so much from companies over time that it gives us solid information.
For example, when we are talking about inflation, it is clear that it is today’s subject, so to speak, but when we are talking about recession, of course I suspect that it may be tomorrow’s subject.
We always say it’s interesting how people view statistics like CPI and GDP.
Why not take a look at some company statistics?
So one of the things that can tell you a lot about the economy is the payment process.
What are Visa and MasterCard and what’s going on?
Is the payment process in progress? Are you going down? How much has it gone up?
Are people using debit or credit?
It provides very useful information as it is shared frequently.
I remember in recent years when there was a lot of debate about the scale of immigration in the UK. The question was not whether or not immigration should be allowed, but how large it should be.
You may recall that when the government said there were tens of thousands of people, it actually turned out to be hundreds of thousands of people, but someone looked at the data you get from walking through a retail grocery store. You did some excellent research.
Tesco Sainsbury, ASDA, Lidl, Aldi, Morrisons and more. So how much foot traffic is crossing them and how many mobile phone SIM cards are operating there?
And they looked at it and said, “No, the population is growing by 500,000 people a year.”
And it was!
The macro information available to businesses provides a tremendous amount of great data that is often ignored.
And we’re basically interested in that. However, it does not influence the actual investment decision.
I’m not going to sit there and think I know what’s going to happen with the macro and then do this or that. Because, firstly, you don’t know what will happen with the macro, and secondly, it’s not. What I’m investing in.
The entire discussion can be viewed here.
For all the latest news and podcasts, join our free newsletter here.
free inventory screener
Don’t forget to check out the free Large Cap 1000 – stock screener,here Acquirer multiple:
