Some of the highly sought after alternative data that professional investors use to try to get a leg up on the market carries a hefty price tag, but individual investors and others don’t have to break the bank to get real-time insights into economic activity.
“Google Trends is very useful, and often Google Trends will correlate with other data we have,” said Thomas Thornton, global head of product marketing and predictive analytics at Bank of America, in a panel discussion during MarketWatch’s virtual Mastering Your Money event on Tuesday.
Alternative data are an array of information gleaned from sources, including the web, satellites and even consumers’ wallets, compared with the usual government- or company-provided data on the economy, earnings and other traditional metrics.
The growth of the internet and the digital economy, along with technological advances in computing and data crunching, have helped to usher in a wave of alternative sources that can be used to gain an investment edge.
Thornton notes that some investors have also focused on mobility data from Alphabet Inc.’s
Google, which allows users to examine by state and city where people are spending their time. Apple Inc.
also provides some useful mobility data, including aggregate readings on transit and driving direction that have been helpful in assessing the economic recovery.
Kastle Systems offers weekly data on building occupancy that can help investors get a sense of where people are getting back 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 top concern heading into the final months of the year.
It is worth paying attention to job-openings data from Indeed.com, she said, while periodical data from UKG Inc. on workforce activity has done a good job in flagging which way risks are tilting relative to consensus ahead of official monthly jobs reports.
That said, investors should take alternative data with a “grain of salt,” recognizing that often time series are quite short and relatively raw, requiring more work to make appropriate seasonal adjustments and other tweaks, she cautioned.