The stock market is a data-driven animal...
And there are a handful of key data points that move this market up and down.
Today, I'll reveal one of these points and show you how we can analyze it to potentially double our money.
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For a transcript of this video, see below. This transcript has been lightly edited for length and clarity.
Want to Double Your Money? Don't Ignore This
You might not pay much attention to payroll data, a key barometer for the nation's employment situation. But you should...
Because this data point can give us clear insights into the direction of the overall stock market.
Let me show you three ways to trade using this data, including one that could potentially double your money.
Option No. 1: Time the Market
The first way is to take a broad approach. In other words, you can use payroll data to time your entry into and exit out of the stock market.
Take a look at this chart:
Dating back to 2017, notice how closely linked payrolls are (the red line) with the performance of the S&P 500 (the blue line). Same peaks, same valleys.
And this correlation extends even further back in time:
Your option here is to take your investment capital and move it around based on payroll data. Is the data encouraging? Make sure you're invested in the S&P 500. Are payrolls weakening? Maybe it's time to move your funds into a money market account.
Had you followed that strategy in 2006 when payroll data started to dip, you would have saved almost half of your portfolio when the Great Recession struck a few years later.
And this strategy can not only keep you from losing money, but it can also help you make money! For instance, you could have kept your money safe while payroll data was falling, but then gotten back into the market when payrolls started to rebound. If so, you could have tripled your position in five years. Amazing, right?
Option No. 2: Get Specific
But if you don't feel like trying to time the overall market, you could focus specifically on staffing companies.
It's a logical strategy. If payrolls are going up, meaning more people are working, then you can bet that staffing companies are booming.
Let's look at one of the biggest staffing companies, Robert Half (NYSE: RHI). As you can see below, between 2006 and 2014, RHI's stock price correlated strongly with monthly payroll data:
Had you used payrolls to time your entry and exit points for this stock, you could have avoided a 60% contraction. You also could have gotten into Robert Half right when payroll data started rebounding and potentially doubled your money within a year.
Over the past two years, it's been the same story:
Payroll data and Robert Half's stock price mirror each other. Between 2020 and 2022, this company's stock price has ranged from more than $100 a share to only about $40. So, there's been a lot of movement, but a lot of opportunities to profit.
Now what if the idea of betting on a single staffing company is too narrow-focused? What if you want a slightly broader approach without trying to time the entire market?
Option No. 3: Think Outside the Box
Well, you could trade the entire staffing ecosystem.
You see, a lot of different companies across a number of sectors rise and fall with payroll data. Let me show you.
Here's hiring for Workday (Nasdaq: WDAY), a company that manages online benefits and time-off requests for workers:
Notice how hiring has fallen significantly. And here's hiring for Western Union (NYSE: WU), a financial services company that enables people to send money to each other:
It's a bit obscure, but keep in mind that when payrolls are up, more people are earning. And many people wire funds to family members, particularly those living in other countries. Here, Western Union's hiring has dropped, though there's a slight uptick this year (more on that in a moment).
Then there's Okta (Nasdaq: OKTA), a security company that helps workers access buildings and systems:
Okta has pulled back its hiring recently. But on the very right-hand side, you can see a slight leveling off. Hmm.
Is the Bottom In?
We have three different ways to play this payroll data:
- Time the overall stock market.
- Target staffing companies.
- Target other companies within the staffing ecosystem.
But there's one other point I want to make. As I noted above, a lot of these companies' hiring activity has leveled off recently, or even ticked up a bit. Is this just a brief pause? Or have we reached the bottom?
Remember, after we hit the staffing bottom, the next phase is typically major growth. And that's where opportunities to double our money really start to appear.
In a recent earnings call, the CEO of Manpower (MAN), another staffing group, noted:
"... We are seeing more companies begin to tap the brakes, while others have their foot hovering above the brake pedal."
That tells me this might simply be a pause and that the bottom is still to come.
Rest assured, I will let you know when that bottom has arrived and when it's time to get back into this market.
In the meantime, I'm sharing an investment opportunity you can get into today with my "Pro" subscribers. This company's stock is on the way up and could deliver returns as high as about 70% in the near term.
We're in it to win it. Zatlin out.
