Cutting out the middleman
We read a lot. But we’re selective about what we read. Starting about 7 years ago, I cut down my news consumption and started reading more from primary sources. For example, instead of reading an article about the GDP report—read the actual GDP report.
One of the best sources of information comes from reading company earnings transcripts. Every quarter all public companies release their financial results. Most companies hold a conference call explaining what happened during the quarter, what they’re expecting for next quarter, and for the rest of the year. At the end of those calls, Wall Street analysts get to ask the company questions.
Through our subscription to FactSet, we get full access to this treasure trove of corporate information, with transcriptions of what was said. These companies have first hand experience with what’s currently going on in their industries, and what they’re seeing sometimes contradicts the prevailing stories in the news.
To illustrate how this works, let’s examine the big questions of the day—are we in a recession? Here are some excerpts from two company calls we read last week:
Al Kelly, Visa CEO on Jul 26, 2022:
“From the numbers I just reviewed…growth has been stable or improving in overall domestic payment volume…and this has been the case for most of 2022 with no indication of any slowdown, including in more recent weeks.”
“Going back to your question on whether we’re seeing any slowdown in spending by lower income consumers, no, we’re not. We keep looking for it, because we’ve heard some other people say it, and we’re not seeing any evidence of that.”
Visa has real-time data on trillions of dollars of transactions globally, broadly spread across different parts of the economy. Could there be a slowdown in spending without them noticing?
Michael Miebach, MasterCard CEO on Jul 28, 2022:
“Consumer spending, and particularly travel related spending, remains strong. US retail spending remains healthy as consumers navigate a high inflation environment”
MasterCard has a similar look into the global economy on a real time basis, and their comments about the US economy are in stark contrast to what you might read in the newspaper or hear from sensationalist Cable TV news.
We derive a lot of value from reading from primary sources, and we hope you find these comments useful.
Disclosure: Dock Street Asset Management, Inc. and our clients own Visa (V) and MasterCard (MA). This article is not intended to be used as investment advice.