Thursday, February 14, 2013

Adding a Few Analytical Tools

The financial analyst must have tools.  I search far and wide for the data sources that make this blog worth reading.  Check out the widget to the right that says "Favorite Analytical Tools" to see the latest additions to my toolbox.

The World Bank Logistics Performance Index ranks countries on the quality and efficiency of their logistics infrastructure.  In a macro sense, it's useful for evaluating whether trade flows for a given country will have structural friction, i.e., a country with poor infrastructure will have a hard time growing its exports.  In a micro sense, I can use it in conjunction with the Transparency International corruption index and Heritage Foundation economic freedom index to assess the risk of a company's investment in a resource play.  I will stay away from hard asset prospectors in countries that score poorly in all three data sets.

The OECD Statistics are an analyst's dream.  I first used them in my MBA program to compare regional business conditions.  The data sets can be mixed and matched in endless combinations.  For example, compare the inflows and outflows of foreign direct investment to see the world market's snap judgement on which countries are considered to be hot investments.  Once again, the multiple reports on transportation infrastructure investment show me which countries are serious about making their economies attractive.

The Federal Reserve's economic research and data is useful for those patient enough to wade through it.  The most relevant basic data for analysts is the "Z-series" Flow of Funds Accounts report, which summarizes changes in U.S. credit markets.  I've also been subscribed to the San Francisco Fed's regular email announcements of published reports for over a decade.  The Fed's longer reports aren't as boring as what you'll find in most academic journals.  Then again, they're not romance novels either.  Maybe the Fed could spice up its reports with some hot action.

The ICI Research and Statistics pages show us what investors are doing in the public capital markets.  The most instructive data for me is in the Weekly Estimated Long-Term Mutual Fund Flows (on the Statistics page).  The downloadable data set says it all.  Retail investors have been pulling money out of actively managed mutual funds and piling into bond funds for quite some time.

I've used these sites and others intermittently over the years but sticking them in a widget makes it official.  Delving into these types of portals is how I spend my time here at Alfidi Capital.  I don't expect professional portfolio managers to keep up with me because I'm so much smarter than them.  They pretend to use hard data to make decisions but they really just copy other firms that succeed in selling hot ideas.