Global Macro Investing and Different Asset Classes
Among the ten asset classes we have cash, equities, fixed income, commodities, currencies, real estate, private equity, venture capital, collectibles, and statistical arbitrage. Obviously not all of these are easily accessible by most retail investors but you can still get into five or more.
Cash is the first asset on the list. While technically a currency we look at it as more of a place of last resort. You earn a bit of interest on it but basically you only use it when you can find another place to put your money to work for a higher return.
Stocks are next. Stocks represent ownership in a company. When we look at stocks we look at them across the globe. That means domestic, foreign, and even emerging market stocks are included. Obviously we look at them different depending upon where they are located but they are still ownership in companies and in this day and age are all part of the global economy.
Bonds also known as fixed income are simply loans to governments and corporations. In return for the loan you get interest payments. Most global macro traders look at US government, foreign government, and corporate bonds when looking for a fixed income trade. By looking at multiple sub classes we have more opportunities for great risk to reward trades.
Commodities are up next. Commodities include things like base metals, precious metals, agricultural products, livestock, and the energy complex like natural gas and crude oil. Macro investors are willing to invest in anything from gold to lumber to even livestock if they can find a good risk to reward opportunity.
Finally we get to currencies. This is actually the largest asset class out there and gives some of the best trading opportunities. If you have an opinion on any country you can buy or short the currency and try and make money.
The last few asset classes are a lot harder to get good exposure to unless you manage a lot of money. With the possible exception of real estate via REIT's the rest of the asset classes are relatively illiquid, so they require a longer time frame in which to invest. Private equity and venture capital can take years to sell and collectibles go through very long dry spells in which liquidity dries up. By looking at everything you not only get a lead up on many trade ideas via the cross research but you also find more pure trading opportunities. - 23167
Cash is the first asset on the list. While technically a currency we look at it as more of a place of last resort. You earn a bit of interest on it but basically you only use it when you can find another place to put your money to work for a higher return.
Stocks are next. Stocks represent ownership in a company. When we look at stocks we look at them across the globe. That means domestic, foreign, and even emerging market stocks are included. Obviously we look at them different depending upon where they are located but they are still ownership in companies and in this day and age are all part of the global economy.
Bonds also known as fixed income are simply loans to governments and corporations. In return for the loan you get interest payments. Most global macro traders look at US government, foreign government, and corporate bonds when looking for a fixed income trade. By looking at multiple sub classes we have more opportunities for great risk to reward trades.
Commodities are up next. Commodities include things like base metals, precious metals, agricultural products, livestock, and the energy complex like natural gas and crude oil. Macro investors are willing to invest in anything from gold to lumber to even livestock if they can find a good risk to reward opportunity.
Finally we get to currencies. This is actually the largest asset class out there and gives some of the best trading opportunities. If you have an opinion on any country you can buy or short the currency and try and make money.
The last few asset classes are a lot harder to get good exposure to unless you manage a lot of money. With the possible exception of real estate via REIT's the rest of the asset classes are relatively illiquid, so they require a longer time frame in which to invest. Private equity and venture capital can take years to sell and collectibles go through very long dry spells in which liquidity dries up. By looking at everything you not only get a lead up on many trade ideas via the cross research but you also find more pure trading opportunities. - 23167
About the Author:
The Macro Trader helps investors find great Global Macro Investing opportunities. Mean Reversion is but one of the many strategies that we use to help find the best risk to reward opportunities across the globe.
posted by X - Men @ 12:45 AM
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