Who I Am & Why the Macro View is So Important

I’ve been in the financial industry for roughly 9 years and am an avid market follower.  I was born in sunny Miami, had a multi-year stint in Chicagoland, and am now living in New York City.  I am a University of Florida alum and candidate for the Master of International Affairs curriculum from Columbia University School of International and Public Affairs (Class of ’14).  I was awarded the CFA charter this past October after passing all 3 examinations on my first attempts.

I’m an avid Formula 1 and college football fan.  Be sure to check out my Linkedin profile.

I hope that the opinions and analysis on this weblog will help you look at things from a “top/down” perspective.  Before, be sure to read my disclosures.  Enjoy!

Why Macro?

Today’s world is highly interconnected.  The inexorable drive towards globalization; exemplified by a proliferation of international trade agreements; exponential advances in technology and resulting productivity, epitomized by internet-on-demand and seamless interconnectivity in global supply chains, a few of many examples; and the consequences of such seismic long-term trends undeniably call for macroeconomic analysis to take on a newfound dominant role in analyzing the world of finance.

To successfully navigate today’s investing landscape, a prudent investor can no longer solely rely on the long-standing institutionalized bedrock of fundamental analysis.  Many say that the 2008 financial crisis was a black swan event that could not have been foreseen.  However, most fail to acknowledge that the crisis was precipitated by a highly conspicuous macro trend, a deteriorating housing market, long before the crisis gained steam; the sector’s representative equity index (XHB) peaked more than a year before the S&P 500, while the Mortgage Bankers Association’s Mortgage applications metric signaled a prolonged period of weakness in demand for housing.  Ultimately, fundamental analysis was blindsided by the largest drop in S&P 500 earnings in history, which resulted in a gargantuan loss of jobs, opportunity, and wealth, mostly from middle-class Americans.

I firmly believe that business leaders and academics are only now beginning to understand and appreciate this seismic shift in how the world of investing works.  I am impassioned with macroeconomic analysis because of my unwavering belief that understanding global macro trends will allow a new wave of successful investors to accomplish two objectives: to better manage risk and enhance return for the millions who entrust their financial assets to the profession of money management as well as to improve the efficiency of capital markets by directing financial resources towards projects that are sustainable and truly “welfare-enhancing” for society.

Things Learned in 2009:

Markets are profoundly shaped by gov’t actions and will be for a long time. Even if growth does not occur organically, the market doesn’t care. All it cares about is potential cash flow growth.  I characterize this as a “moral hazard” premium.  Investors have been trained to believe that the government will be there if there are economic troubles.

Another little secret: the economy only matters 25% of the time and thus analysis must be extended to sentiment, liquidity, and technicals. All of these factors must be taken into consideration to properly navigate the markets. The key is actually not forecasting economic outcomes, but instead the timing of your forecast.

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