With that said, how do you perform proper macroeconomic analysis that is useful for picking stocks?
It is very easy.
Step #1. Read, Listen & Follow
Read and listen as much as you can. Yet, be very selective. Here is what I DON’T want you to read and/or listen to.
- Most Economists
- Professors of Economics/Finance
- Technical Economic Papers (they are worthless when it comes to market applications).
- Talking Heads On TV
- News, Newspapers or Magazines
- Politicians
- Market Pundits
Be aware of these sources, but do not take them at their core value. Simply put, their interests are not aligned with yours. They either want your attention or they are trying to sell you something. Plus, in the majority of the cases, all of these sources are simply recycling the old news and putting their own spin or analysis on it. Yes, their view could be accurate, but it is rarely so.
At the same time, here is what I DO want you do to.
I want you find market practitioners (money managers, hedge fund manager & investment advisers) who have a very good track record when it comes to stock market or economic predictions. I want you to start following these people. I want you to read, listen and study everything that they have to say. These people have a proven track record and for the most part they do not have time for nonsense. Just as your money is on the line, so is theirs. This aligns your interests and ensures that their opinion is at least backed by capital.
For example, you can follow my blog at www.investwithalex.com if you believe the opinion I share on it is an accurate one. There are too many other smart and capable money guys that I can recommend, but I will not. Discovering these people is part of the process of learning who you should follow and who you should avoid. Just as you should never buy/sell stocks based on somebody else’s advice, you should never blindly follow someone and their opinion. Even though they might sounds very smart, they might also be wrong. Remember, you must always perform your own research in order to form your own conclusions.
With that said, here is the best part. Being an independent thinker in the investment world pays off….big time.
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