Can anybody recommend me more books on this? So far, I found this one: http://www.amazon.com/Investing-Top-Down-Approach-Capital/dp/0071543848/ref=sr_1_12?ie=UTF8&qid=1249994153&sr=8-12
There’s surprisingly little written on macro investing, when compared to things like value investing, growth investing, quant investing, etc. If you like global macro, “Inside the House of Money” is THE book to read. It isn’t a how-to; it’s more a set of interviews with macro managers, but you can learn a lot about how people do macro. (I’ve heard that a lot of the people in that book are out of business right now, though). I’ve read this one (Investing from the top down), and while I think it is useful, I found it ultimately unsatisfying. It spends a lot of time on the advantages of top-down investing, when presumably, it is preaching to the choir, since you wouldn’t have bought the book if you weren’t into it. The writing is a bit blah too. Nonetheless, there were a few nuggets I got out of the book, and at the end it has about 40 lists of macro-indicators that suggest making macro-type adjustments. A lot of the indicators are things you probably already know about, but there must be at least one or two out of the 40 that are new and potentially useful.
Thanks Bchadwick. I thought the top-down book had some uses (at least as an intro, particularily some of the stuff at the end). I’ve heard of “inside the house of money” but I thought it was something more along the lines of “Market wizards”. I will check that out. I’m pretty surprised at the lack of macro investing material as well. I do not have a degree in economics, so much of this has some value to me. Would reading books like “Secrets of economic indicators” (that type of book) be a better bet at getting a macro view?
“Inside the House of Money” is a bit like “market wizards,” but don’t discount it for that. In macro, you have to 1) discover a macro theme, 2) figure out how to turn that into a tradable idea, 3) figure out how to control your risk, because a lot of your themes may be either a) wrong, or b) take forever to develop. Some people dismiss “market wizards” because a lot of the focus is on technical analysis, which a large part of the investment community (especially CFA types) likes to claim is useless. After looking at TA a while, I’ve concluded that it is NOT useless, but I don’t usually feel comfortable with pure TA approaches. Global macro actually does involve a lot of trading techniques that technical investor types also use. The justification behind the techniques is generally different, but the process of grabbing a theme is similar. As for “Secrets of Economic Indicators,” I think that might be good for a weekend skim and to have on your bookshelf as a reference item, but I don’t think you’ll find too many real “secrets” in there.
I’ve heard that TA is has some uses as a reference, but that’s about it. So books about how to interpret Economic indicators aren’t so important? I had this book on my “must read” list.
If you’re not familiar with them, they’re important. My point is that if you’ve been following the news over the last few years, you may well have absorbed a lot of the indicators already. In crisis times, these macro indicators tend to get a lot more attention in the news. However, the “secrets” book is useful for offering more detail about how these indicators are measured and what sorts of things tend to react to them, that’s why I suggested it as a reference book that you keep on your shelf after you’ve skimmed it.
Thanks for the clarification. I intend to read that entire book then to get a more efficient comphrehension. I also found the “Dick Davis Dividend” which, like “Irrational Exuberance” seems to have a lot of market insights. http://www.amazon.com/Dick-Davis-Dividend-Straight-Making/dp/0470099038/ref=sr_1_1?ie=UTF8&qid=1250024387&sr=8-1