By Mitch Zacks, Senior Portfolio Manager at Zacks Investment Management, Inc.
“The market is always looking out six to eight months. For this reason, investing using macro-economic data is not necessarily a winning strategy. Macro-economic data tends to be backward looking. The unemployment numbers tell you what has happened in the past; however, they don’t give a good read as to what might happen in the future. The S&P 500 does not care what the GDP numbers were last quarter. Instead, it is looking at what GDP growth is going to be in the coming quarter and, most importantly, whether that growth will come in stronger or weaker than current expectations. For this reason, I almost always prefer to follow an investment strategy that focuses on forward looking metrics, like changes in analysts’ earnings estimates, rather than trying to decipher what the latest CPI number is telling us about the market.