Benefits of a Global Macro Strategy
What is it? Global Macro is when you look all over the world for the best trading opportunities in any market. Instead of pigeon holing yourself into one style or category such as small cap US equity, you should be looking for the best trades period. Most global macro traders look at the best absolute and risk adjusted trades and not the weak relative basis trades.
Many investors get stuck looking at the same market over and over looking for opportunity. Global macro traders look at anything that may give the best return. They look for the biggest bang for their buck on a risk and absolute basis.
So why would we want to look at other asset classes and countries? One of the reasons is diversification. many pundits talk about diversifying as some type of holy grail. And yet they don’t adequately diversify you. They will put some in stocks and some in bonds and call it good. Global macro investors will instead look at countries as well asset classes to determine where is the best trade. They look at stocks, bonds, commodities, currencies, real estate, and even private equity.
The main problem with indexing is as Keynes puts it “in the long run we are all dead.” If you have forever then buy and hold is great. Over decades and centuries stock indexes have performed well. But over some 20 year periods they have done absolutely horrid. So let go of that limiting belief and learn a better way to look at things.
The long run is fraught with different hazards. Not the least of which is that the market has gone virtually nowhere for up to 20 years at a time more then once in the last 50 years. if you can sit with zero or even negative returns for years on end then be my guest. if you want something better then read on.
Hopefully by now you realize that this is not a sound investment plan and that you can’t sit around forever in an index that is treading water or even drowning. If you had bought the SP500 20 years ago as of this writing you would only be up 235% total. That comes out to a meager 4.6% annual return. You could have done that in Treasury bonds with zero risk. Was it worth the ride? No, it was not.
Sitting for 10 and even 20 years on negative returns have you down on investing? If you are like most investors you are frustrated and need help. Look at different investment styles that are really different. A new stock picking strategy is not much different then buying an index of stocks. Instead open your eyes to different asset classes and countries and find the best risk to reward opportunities the world over. Global macro trading allows you to see it all.
Related posts:
- Stocks, Bonds, and Mutual Funds Explained What do you know about investments? Hardly anything? Does financial...
- Make Money With Penny Stocks If you see the term "Penny stocks" this is refering...
- Are You Adverse To or Comfortable With Investment Risk? Obviously were all different and have different goals and styles...
- Tic investing for Boomers. Boomers Bank In investment finance, private equity real estate is...
- Investments That Work We are all dreaming of that special day when we...