Three Secrets Wall Street Is Terrified You’ll Discover

It was Sir Francis Bacon who gave us the truism that "knowledge is power."

And the 17th century English philosopher and statesman did so centuries before Wall Street was even conceived.

But the brokers, fund managers, and other pros who dreamed up the investment markets knew a good thing when they saw it. They embraced Bacon's maxim, launched the first U.S. stock exchange in 1790, and spent the next two centuries transforming this country's individual investors into scared vassals of the Wall Street elite.

And the big banks, brokerages, and other investment pros did this by never forgetting the simple precept that "knowledge is power."

I see this play out on an almost-daily basis thanks to the endless streams of impenetrable reports that come from the bankers in New York or our elected leaders in Washington.

Most Main Street investors lack the knowledge to "decode" these reports, so they also lack the power to respond in a constructive manner.

Instead most of us just react - panic really. An upbeat economic report prompts investors to shoot stocks higher one day. But on the next, a seemingly conflicting report causes share prices to plummet.

Wall Street isn't fazed by this whipsaw trading, of course: As individual investors, we must travel the road that's owned by the pros. And that means we must pay a "toll" - in the form of a commission or transaction fee - with every move we make.

In fact, there's even an incentive to make us take more trips - heading north (bullish) one day and south (bearish) the next: The more trips we take, the more of those "tolls" that we have to pay - and the larger the pile of profits that Wall Street reaps.

Knowledge isn't just power: It also represents profits... even wealth.

I'm putting such a fine point on this - and telling you about Francis Bacon - for a very specific reason: Thanks to the 30 years I've spent watching and working with Silicon Valley companies, I long ago "cracked the code" that gives Wall Street so much power over America's Main Street investors.

I've identified the three specific economic reports that matter - and have deciphered what they mean. And I know which ones are just claptrap - mind-numbing clutter - designed to maintain the very one-sided status quo.

And today I'm going to give you a backstage pass... so you'll have direct access to that "knowledge" - and the "power" profits that accompany it.

A Backstage Pass

I'm sure that almost all of you - at one time or another - have heard someone talk about a "velvet rope." If so, have you stopped to think about what the term means?

Think about some of the finer places you've visited - a Broadway play, a hot new restaurant, or that just-opened nightclub: As you wait your turn, the "gatekeeper" - a maître d', hostess, or bouncer - keeps you on that "other" side of a literal "velvet rope."

That wait can be long... and frustrating - especially when the "connected" patrons get in before you.

Wall Street plays the same game. The bankers, fund managers, and other pros want to keep you at bay - while giving their best clients first access to the "best-in-show" investments. But in this case, the velvet rope is knowledge - about the relative health of the U.S. and global economies.

And the Wall Street crowd will hate me for telling you this, but the game is nowhere near as complicated as the pros would have you believe. In fact, in assessing the strength of the U.S. economy as I analyze tech plays, I've really found that these three economic "data points" are the most important to follow:

jobs (hiring), autos, and housing.

At its most basic level, this makes complete sense. The jobs situation is the key to U.S. economic health. As much as two-thirds of America's market-based economy is driven by consumer spending. Business spending is also crucial - particularly when it comes to the "stuff" that the tech sector makes.

Consumers and businesses spend the most when they are confident about the future.

And confidence has a lot to do with predictability - like the wage predictability that comes with job stability... or better, still, when there's outright hiring taking place.

When consumers start feeling a bit more secure about the future, they'll ramp up their spending a bit on bigger-ticket items like new vehicles. And when they're really confident, they'll get into even-bigger-ticket purchases - like new houses.

To give you more knowledge - and more power (enough to make you smarter and richer, in fact) - I've used these insights to create three smart-investor indicators.

If enough Main Street investors learn to spot and use these three investing "secrets," Wall Street will find itself at our mercy. And what a day that will be.

Let's peruse each of the three. And we'll start with the basic building block - jobs.

Investing Secret No. 1: Hiring = Confidence

This number, which measures how tech leaders feel about hiring, comes from the Silicon Valley Leadership Group's regular poll of sector chief executive officers (CEOs). According to the organization's most recent poll, more than half the members of the corner-office crowd say they plan to hire more workers this year.

Just think about how you feel when you know that your employer is thinking about expansion - which necessitates hiring: It's definitely a confidence booster.

So if the Silicon Valley cognoscenti expect to hire, it clearly means they are expecting continued strong demand for the products and services their companies offer.

And right now, tech CEOs are bullish. Of the 222 surveyed, 59% plan to hire this year - up from 46% a year ago. In fact, in the most recent survey that appeared in March, most CEOs were worried about not being able to hire enough workers.

Clearly, we don't want to rely on a single survey, no matter how good, to tell us what's happening with employment.

That's why I also keep abreast of the official jobs numbers coming out of Washington.

The U.S. economy added 288,000 jobs in April. That's the fourth-best monthly gain in the recovery's five-year history.

The timing also was great. It came right after Washington told us the economy grew at a dismal 0.1% for the first quarter.

I grant you, that gross domestic product report paints a less-than-upbeat portrait of how healthy America really was during the first three months of the year. But I'm actually not that concerned: I believe that number will be revised upward because of another important set of stats I track regularly ...

Investing Secret No. 2: When Vehicle Sales Zoom, Growth Follows

I've been following the U.S. automobile industry for decades now. As a young analyst, I spent my formative years in Detroit, where I met with CEOs of all the car companies and many of the parts producers.

I've visited assembly plants here in the United States and overseas. I was in Detroit in the very early days of robotics manufacturing. I also witnessed the rollout of computer technology that improved the performance, reliability, and fuel economy of new cars and trucks.

As heady as those days were, they've been dramatically eclipsed by today's vehicles, each of which is a high-tech "ecosystem" unto itself. They're brimming with sensors, semiconductors, LEDs, GPS, wireless web communications systems, and much more.

In fact, the Institute of Physics says that NASA sent the Apollo astronauts to the moon back in 1969 using less computing power than you'll find in the typical family car. Today's typical luxury car has more than 100 million lines of computer code, while software and electronics account for 40% of the car's cost and half of warranty claims.

So it's no surprise that auto sales are a strong indicator of the health of Silicon Valley.

And I'm very happy to report to you that the U.S. auto industry has snapped back after a tough winter and is racing ahead.

In April, the industry sold 1.39 million new vehicles, an 8% increase from the year-ago period. On an adjusted basis, the surge pushed the annualized run rate to 16.1 million, a yearly gain of 6%.

I also like to get the pulse of the industry by looking at what the automakers are projecting for total industry sales.

And every single major automaker polled so far expects total cars and trucks sold this year to hit at least 16 million units, compared with 2013's final tally of 15.3 million.

Clearly, job growth and auto sales are crucial barometers of the health of the American economy.

But there's one other metric that is critical for us to understand if we're to start making smarter investments...

Investing Secret No. 3: Housing Heals the Bulls

There's a good reason why Uncle Sam lets you deduct mortgage interest payments from your taxes: A healthy housing industry is a major catalyst for economic growth.

And it's not just the millions of construction and home-contractor jobs that are involved. A healthy housing market also means more sales of appliances, furniture, home furnishings, paint, and lumber - as well as the equipment for home-entertainment systems and in-house Wi-Fi networks.

Right now, a lot of analysts see trouble brewing. Sales of new homes fell 13% in March from a year ago. Plus, sales of existing homes have fallen for several months.

But I'm not worried about these numbers - and for two very strong reasons.

First, severe winter weather in much of the country shut down construction. And it kept many prospective homebuyers indoors. It also prevented many home-improvement projects from being completed, a fact the mainstream media seems to be ignoring.

Second, sales of existing homes have declined because the supply of distressed housing continues to fall. In other words, we don't have an oversupply of homes; there aren't enough homes to satisfy demand.

Put more simply: You can't sell what you don't have.

I came to this conclusion courtesy of another housing stat. Data provider CoreLogic Inc. (NYSE: CLGX) says average housing prices rose 11% in March compared with the same month in 2013.

CoreLogic didn't provide median price estimates. But the company did say that we've seen higher annualized housing prices for 25 straight months.

Putting It All Together

As most of you folks know, one of my investing mantras tells us to "separate the signal from the noise." As I see it, these three signals are telling us that America's economy is healthy and growing. Tech CEOs are still hiring, new cars and trucks are moving off lots at near-record levels, and the demand for homes still exceeds supply.

I know some investors keep an eye on a longer list of economic indicators. And in their own attempts at subterfuge, the Wall Street pros try to bury us with an avalanche of often contradictory indicators... the goal being to keep the knowledge and the power on their side of the investment velvet rope.

But the goal here is to cut through the clutter and get a quick snapshot of what's reallyhappening with the economy.

By focusing on the three investing "secrets" listed above - those key signals of hiring, auto sales, and housing-market health - you'll cut through most of the noise. You'll have the knowledge... and the power.

And that will make you a smarter, more profitable investor - and will put you on the path to meaningful wealth.

Stop back later this week.

Editor's Note: For the last 12 months, Michael has been hot on the trail of something called Operation BlueStar. It surrounds a mysterious facility - about the size of 174 football fields - being built here in the United States... a facility that could single-handedly disrupt $737 billion of America's economy. Michael's investigation has led him to one of the most exciting investment opportunities we've ever come across. Click here so Michael can walk you through everything he dug up.