Yes, I have an MS in finance. Yes, I passed the CFA exam. However, my expertise lies mainly in accounting, and at that, mainly in tax accounting. Economics is my weak spot.
If I’m going to be talking to prospective clients about economic issues, I need to understand this junk better. Mainly, I need to understand monetary policy, balance of trade, and all the various economic reports (jobs, employment, etc.) and how they affect the financial markets.
Anybody have any suggestions on good, readable books on the matter? Not looking to dive into a Master’s level textbook, especially if there’s a lot of math involved.
(FYI - I’m not looking for a “social economics” book like Freakonomics or The Undercover Economist. Not bad books, but not helpful for my agenda.)
While we’re at it–is the CFA curriculum as good a source as any?
There’s also the book that CFA publishes. “Economics for Investment Decision Makers: Macro, Micro, and International Economics”. I don’t know if it’s essentially the same stuff that’s in the curriculum, or if it’s fundamentally different.
Nowadays I tend to favor the “real life commentary” approach. That is, read Gartman Letter or some other investment thing, then try to understand the argument. If there is something there you don’t understand, read about that topic. Then you can even directly talk about those ideas with your clients, that is “Gartman says to buy commodities because XYZ.”
Sounds like you’re asking two questions: 1) Where can I learn more about general economic terms and crap; and 2) how can I stay up to speed on the current state of the economy.
The answer to #1 is - L1 CFA econ is all you need to talk to 99% of the general population. The answer to #2 is reading the WSJ every day mixed with The Economist and a little zerohedge (for serious. I wouldn’t go around telling clients the world is going to end, but many think it is anyway so having some ZH material at the front of your mind will give you some good talking points).
Just be aware of what the major economic metrics are and be able to discuss how any given data point could be either good news or bad news. Doesn’t matter if you’re right. No economist is right very often.
Other resources should include your broker-dealer’s commentary and info you can get from wholesalers. For example, when I was working with advisors, many would request our quarterly econ and market outlook. It’s retail approved and goes over the major events from the previous quarter, and what to watch out for in the current quarter. If you need to go deeper than that, fire the client.
Yes, knowing economics in the academic sense is knowing how to build economic models, many of which fail when applied to real world situations.
Knowing eocnomics in the business sense is being able to make economic arguments that are reasonably defensible and knowing both the current state of the economy (which is a mixture of stats and trends and risks) and how it compares to historical states of the economy.
I think Ohai’s approach is sensible. I often listen to Bloomberg’s “On the Economy” and then when there’s stuff I don’t understand or have forgotten, do a Google search or something to figure it out. Do it fairly regularly and it will start to make more sense.
This is pretty much right. I need to know general economic stuff, like “When interest rates go up, what happens to ______?” and “The jobs report showed a gain of XX jobs this month, which affects your portfolio .”
Once I learn the textbook theory, then I need to find a reputable weekly/monthly magazine or newsletter that I can use to sound like I know what I’m talking about.
Good suggestions by Sweep. Sounds like I just need to get in contact with some of the wholesalers. Any suggestions on what wholesalers to use? Oppenheimer reached out to me (but to be honest, I don’t like them and don’t like their funds). I called Blackrock, but they haven’t been extremely helpful.
I also signed up for the Gartman free trial, at Ohai’s suggestion. It looks promising, but there’s zero chance I’m going to pay $400 per month for it. Does anybody have a corporate account with extra users? If so, PM me.
Honestly, you can bypass the wholesalers for the most part. BlackRock publishes their commentary online, as do most other asset managers. That would at least get you started but you don’t want to put that in front of clients…not even sure if you can, compliance-wise. That’s where the wholesalers come in. They can hook you up with retail approved material. I think pretty much every firm has some sort of econ overview. I’d just go with whoever calls you next.
Agree with others about reading as much economic commentary from asset managers as you can get your hands on. Most of it is free online. One item I really enjoy is JPMorgan’s little book about the markets that has conference calls with one of their economic bigwigs, David Kelly. If you dial into those calls and/or look over the slides, you will have a solid hold on the latest and greatest of what’s going on in the markets and economy.
Here, I even googled it for you because I’m part of the Greenman Fan Club. Enjoy: