How equity investors can tap into alternative data without breaking the bank

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Some of the highly sought-after alternative data that professional investors use to try and get a head start in the market comes at a steep price, but individual investors and others don’t have to break the bank for real-time insight into the market. the economic activity. .

“Google Trends is very useful, and often Google Trends will correlate with other data we have,” Thomas Thornton, global head of product marketing and predictive analytics at Bank of America, said at a table round at MarketWatch’s Mastering Your Money virtual event on Tuesday. .

Alternative data is a collection of information gleaned from sources, including the web, satellites, and even consumer wallets, compared to the usual data provided by government or businesses on the economy, profits and business. other traditional measures.

To verify: The explosion of ‘alternative’ data gives regular investors access to tools previously used only by hedge funds

The growth of the internet and the digital economy, along with technological advancements in computing and data processing, have helped pave the way for a wave of alternative sources that can be used to gain a material advantage. investment.

Thornton notes that some investors have also focused on Alphabet Inc.’s GOOG mobility data,
-3.76%
Google, which allows users to search by state and city where people spend their time. Apple Inc. AAPL,
-2.38%
Also provides useful data on mobility, including aggregate readings on transit and driving direction that have been helpful in assessing economic recovery.

Kastle Systems offers weekly building occupancy data that can help investors get a sense of where people are returning to work or not, Thornton said.

Aneta Markowska, chief financial economist at Jefferies, highlighted data sources that can be used to track the labor market – a major concern as the final months of the year approach.

Attention should be paid to Indeed.com’s job posting data, she said, while UKG Inc.’s periodic data on workforce activity has risen. good job in indicating which way the risks are tilted relative to the consensus ahead of the official monthly employment reports.

That said, investors should take the alternative data with a “grain of salt”, recognizing that time series are often quite short and relatively crude, requiring more work to make appropriate seasonal adjustments and other adjustments. -she warned.


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Shawn Beecher

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