[HN Gopher] Ask HN: How can I learn macroeconomics properly?
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Ask HN: How can I learn macroeconomics properly?
Last 3 years has shown that to be a good investor you need to know
macroeconomics, specially in context of USA which bring stuff
interest rate, QE, bonds pricing, commodity prices, and many
similar things which are interconnected. I have lot of general
knowledge but I want to be at an expert level of knowledge in
predicting/understanding what feds, markets, rates are gonna do and
why.
Author : techsin101
Score : 92 points
Date : 2022-04-30 20:55 UTC (3 days ago)
| dash2 wrote:
| You probably want finance as much as macro. Take a master's
| degree (not sure if these are as common in the US as in Europe).
| This stuff is hard, you need to spend time on it. Failing that,
| follow the advice of lesswrong and read textbooks.
| camnora wrote:
| Textbooks won't tell you about Brent Johnson's Dollar Milkshake
| theory. They also won't have insight on todays inflation and
| whether it's more similar to the 1970s or 1940s. Textbooks are
| great for finance fundamentals, but shouldn't be the sole
| source of macro.
| adflux wrote:
| I personally _love_ Thomas Sowell's work. Basic Economics would
| be a great start, especially now with the current housing crisis.
| Very amusing and interesting read aswell.
|
| He's got quite a few (albeit politically tinted) interviews with
| the Hoover Foundation on Youtube.
| CPLX wrote:
| I have a degree in economics. Both of my parents have PhD's in
| economics from MIT and were professors of economics with dozens
| of published works. I grew up around economists including
| multiple Nobel prizes winners in economics.
|
| None of this has anything to do with being good at investing on a
| personal level. Like nothing, in fact I would argue that it's
| probably harmful and in my experience causes people to overthink
| things.
|
| Economics as a profession has a fucking terrible track record of
| predicting financial markets or broad macroeconomic trends. At
| this point I'm not sure it's even clear what economics is for but
| I can say with confidence that it's definitely not the place to
| start if you want to get better at investing.
| hervature wrote:
| Agree very much with this. Have an economics degree, PhD from a
| finance department (although my research was not finance).
| Personally, with a solid grasp of calculus II, I breezed
| through my economics degree. Including graduate level courses.
| My two cents are that an understanding of stats and honing
| probabilistic intuition (a devilish thing to do) is much more
| important. Of course, the basic education helps you grok
| things, how/why a central bank influences an economy, but you
| may be led astray if you put too much faith into things like
| the Phillips curve. I would suggest reading any respected macro
| textbook as well as Hull for learning how financial instruments
| are priced. You'll quickly learn that diversifying will get you
| 95% of the way there with 100% of your mental well-being
| intact. If you want to be fancy at your cocktail parties, throw
| a Markowitz optimization over your portfolio. Unless you are
| willing to devote your entire time finding an edge, you just
| will not be able to compete with hedge funds and their arsenal
| of tools, chief among them is a constant stream of intelligent
| and well paid people to devote their entire time doing it.
| mihaic wrote:
| Pretty much what I was thinking, but thank you for bringing
| some authority so it's not just an opinion.
| bwanab wrote:
| John Maynard Keynes was arguably the greatest macroeconomic mind
| of all time, but after losing a lot of money, he came to the
| conclusion that one should invest in companies that 1) make
| products you understand and 2) have management that you trust. If
| that sounds familiar, it should since that is Warren Buffet's
| strategy who has been known to quote Keynes often.
| jah242 wrote:
| I second this and can't recommend Keynes and his writing highly
| enough.
|
| I would also add that if you can get hold of Volume 12 of The
| Collected Writings of John Maynard Keynes it goes through his
| time as an investor and all related correspondence in great
| detail. Fascinating from a historical and practical
| perspective.
| camnora wrote:
| Here's a list of podcasts that touch on macro: - Eurodollar
| University - The Grant Williams Podcast - Grant's Current Yield -
| Hidden Forces - Inside Baseball with Old Chestnut - Keeping it
| Simple with Simplify Asset Management - Library of Mistakes - The
| Macro Compass - Macro Musings - The Macro Trading Floor - Macro
| Voices - The Market Huddle - Money Sense - On The Margin - Real
| Conversations - Real Vision Daily Briefing - The Rebel Capitalist
| Show - Super Investors and the Art of Worldly Wisdom - Wealthion
|
| The best thing you can do is be open to hearing all
| opinion/theories. Some people will contradict others, but over
| time you figure out who is right and who is not.
|
| In addition, I also watch a few indices in my stock app for a
| high level overview. These are the treasury yields, corporate
| credit spreads, dollar index, s&p 500, nasdaq, etc. I used to
| follow much more, but it's not needed for higher level macro.
| Mikeb85 wrote:
| Take economics in university? Buy a macroeconomics textbook?
|
| > predicting/understanding what feds
|
| This is the most unpredictable element since their goals seem to
| shift with politics and have little to do with economics. They've
| allowed asset prices to get pumped up for a long time and it's
| still not clear whether they have the guts to actually increase
| rates to stop inflation (or if they even should...).
|
| > markets
|
| Everything is supply/demand. Asset prices are all about
| supply/demand for the ASSET itself, fundamentals don't matter in
| the short run.
|
| > rates
|
| Are more or less set by the Fed. Which is somewhat directed by
| politics.
| amelius wrote:
| Isn't macroeconomics a good candidate field for being disrupted
| by deep-learning algorithms?
| Mikeb85 wrote:
| You're so, so far behind it's not even funny. Economists have
| been using statistics, programming, deep learning, etc... for a
| while now.
| amelius wrote:
| I know... the question is: when does the DL take over
| entirely?
| Smithy1 wrote:
| Read everything by Ray Dalio (see LinkedIn) and Lyn Alden (see
| her website).
| glmeece wrote:
| Not trying to be reductionistic, but you might start with
| "Economics in One Lesson". Yes, a lot of Libertarians accept all
| the premises prima fascie, but that doesn't mean it's not worth
| reading.
|
| PDF:
| http://leeconomics.com/Literature/Henry%20Hazlitt%20Economic...
| maxai wrote:
| MIT OpenCourseWare [1] is your best bet here.
|
| [1] https://ocw.mit.edu/search/?q=macroeconomics
| dr-neptune wrote:
| This is a great suggestion
|
| I've been reading the textbook for the intro macro class here
| and supplementing the reading with blogs and it seems to be
| working quite well. At the very least, I have a decent
| conceptual understanding and know the vocabulary after just a
| couple months of reading ~30m/day
| RockyMcNuts wrote:
| There are many different types of models used for different
| purposes.
|
| https://www.piie.com/blogs/realtime-economic-issues-watch/ne...
|
| https://mainlymacro.blogspot.com/2013/12/microfoundations-il...
|
| the models people use to explain/illustrate are more toy models,
| micro-founded DSGE models, for forecasting typically people tend
| to use empirical models.
|
| One approach would be to do a college intro to macro textbook or
| MOOC and then possibly a course on forecasting, like
| https://www.edx.org/course/macroeconometric-forecasting-2
|
| there isn't much of a consensus on what 'properly' means but IMHO
| a good start is just understanding the IS/LM analysis and what
| the curves look like under assumptions from classical models,
| keynesian, and keynesian-classical synthesis (basically says more
| keynes in short run and more classical in long run), phillips
| curve, lucas critique.
|
| then some monetary economics (old school macro tends to ignore
| financial sector), international trade, open economy macro.
|
| with maybe a time series forecasting book/course thrown in
|
| complementarity is king
| https://scholar.harvard.edu/files/laibson/files/seven_proper...
|
| doing macro as an investor is a little bit like doing weather
| forecasting as a sailor ... it's important to understand the
| kinds of conditions you might be sailing in but probably a bit
| futile and pointless to do a very deep dive into the math of it.
|
| my question would be what is the best book or course for time
| series analysis?
| dr-neptune wrote:
| Rob Hyndmans book is a great quick intro:
|
| https://otexts.com/fpp3/
|
| If you want to jump in the deep end (aka you know good chunk of
| mathematics), you could skim Hamilton's Time Series Analysis
|
| A good way to learn is to do a bunch of time series analysis,
| kaggle has some
| RockyMcNuts wrote:
| thanks!
| irksomehails wrote:
| I have this resource bookmarked from some time ago, check it out.
| https://www.core-econ.org/the-economy/book/text/0-3-contents...
| avvt4avaw wrote:
| I'm a professional investor (more than a decade of experience at
| hedge funds, particularly in global macro and quant, managing my
| own and other people's money).
|
| Your central premise is flawed -- in particular
|
| > Last 3 years has shown that to be a good investor you need to
| know macroeconomics
|
| This is not true. It is true that 'macro' events (central bank
| actions, supply/demand shocks, wars, pandemics) affect prices,
| but it's not true that you need to be a macroeconomic expert to
| be a good investor:
|
| 1. Any understanding of macro you get from reading in your spare
| time is unlikely to be good enough to use as the basis for an
| investment strategy (although you may _think_ it is -- but this
| will just lead to you making bad, or at best random, market
| timing decisions)
|
| 2. Even if you could become an expert, there isn't a clear
| mapping from macroeconomic outcomes to asset prices. So you not
| only need to be right about the macro picture, you need to be
| right about the effect it will have on asset prices (including
| the second- and third-order effects, e.g. central bank and other
| investor reactions to the macro outcomes)
|
| 3. Even if you do become a macro expert, and you have the correct
| mapping from macro outcomes to asset prices, it's not enough. You
| don't only need to be right about the macro outcomes, you need to
| be _more right than the market_. The market is made up of a huge
| number of diverse actors, many of whom have access to vast
| resources and spent literally all of their waking time trying to
| use macro data to predict asset prices. Are you better than them?
|
| 4. Even if the above can all be overcome -- is this really the
| highest return use of your time (compared to e.g. getting better
| at your day job and increasing your income, or starting a company
| in your area of expertise and getting rich that way)
|
| That all sounds daunting, but fortunately there's a solution!
| Simply buy a diversified set of investments in a tax-efficient
| wrapper for a total cost of < 10 basis points annually, and add
| capital to the pot regularly, and you will get great investment
| results over any 25-30 year time horizon, with essentially zero
| effort.
| huitzitziltzin wrote:
| I'm an economics professor (not in macro, but I've taken more
| macro and at a higher level than you have).
|
| I think this comment is right on the money. None of what I
| learned in graduate school would help you forecast the price of
| a specific asset.
|
| Some of the large investment firms do employ economics PhDs to
| help them make forecasts of particular broad macro variables
| (inflation, unemployment, etc.). I don't know of anyone who
| uses their macro background to forecast specific asset prices
| (e.g., Amazon's share price).
|
| (Note that there are people in economics who study time series
| forecasting - that can be used to make forecasts for specific
| assets but is considered somewhat separate from most macro
| modeling, which is micro founded and done in a DSGE framework.)
|
| I'd recommend you study macro bc it is interesting and
| intellectually rewarding, but I don't think it's going to tell
| you anything about pricing a specific asset.
| otterley wrote:
| How are your returns compared to those of a passive S&P 500
| investor over the past decade?
| [deleted]
| [deleted]
| avvt4avaw wrote:
| About the same, with lower volatility and much lower
| drawdowns (that's net of fees -- before fees they are _much_
| better).
| testkitchen wrote:
| If you are interested in investing in government bonds,
| macroeconomic forecasting could be quite important, but
| overall, it doesn't help you much for stock return predictions.
| In fact, very few variables (macroeconomic indicators included)
| show robust power to predict market returns.
| countvonbalzac wrote:
| Do you have any recommendations for tax efficient wrappers?
| loxias wrote:
| Buy SPY, put it in your IRA. Maybe a SPY/TLT mix. For bonus
| income, sell monthly covered calls against SPY as well.
| avvt4avaw wrote:
| In the UK (where I am) the main ones are SIPPs and investment
| ISAs. In the US I believe people mainly use Roth IRAs (this
| is not any special secret advice, it is like the first thing
| your tax adviser will tell you).
| topaztee wrote:
| can you expand on this? `Simply buy a diversified set of
| investments in a tax-efficient wrapper for a total cost of < 10
| basis points annually,`
| nickff wrote:
| I believe the parent is suggesting that people buy broad-
| market exchange-traded funds (ETFs) in whatever type of
| account is most tax-efficient.
| avvt4avaw wrote:
| Yes.
| danielmarkbruce wrote:
| +100. I spent some time at a couple hedge funds and couldn't
| agree more.
|
| Even if OP wants to be an active investor, it's more likely
| they can do it Buffett style than Soros style. Many great
| investors have zero macro insight. Buffett, Munger, Lynch,
| Icahn, Ackman. There is a direct mapping from company level
| insight to the securities price - it's not easy, but it's at
| least understandable.
| Adraghast wrote:
| I'm curious why you became a "professional investor" instead of
| following your own advice.
|
| > Are you better than them?
|
| Are you?
| coding123 wrote:
| > Are you?
|
| I think he's saying that no-one person can be better.
|
| Stock market crashed on 9-11. So what happened the next time
| the world had such a huge hit (Covid)? the markets rose
| because everyone was piling to get that same post-911 dip. It
| didn't exist because everyone that was expecting it caused
| the same to not happen. So I guess if you think you know
| what's going to happen next. You're probably 1 of a million
| others that are guessing the same thing and so what you think
| will happen doesn't.
|
| It also doesn't help that the government's reaction changes
| to major crisis events too - and those actions you can't
| predict- let alone what affect they will have.
|
| It's basically a super large neural net (the largest). I mean
| can someone put in something crazy into GPT3 and before they
| enter it (something not entered previously) GUESS what's
| going to come out?
| lutorm wrote:
| Yeah, this is what I was thinking too. If there was a
| theory by which you could predict the outcome of the
| market, the mere presence of such a theory would affect the
| market such that the theory no longer applied. Sort of a
| Heisenberg Uncertainty Principle of Economics, but worse.
| ;-)
| avvt4avaw wrote:
| The glib answer is that my own advice in 2022 wasn't
| available to me when I started my career in finance in 2010.
|
| The less glib answer is that what I said above applies to
| managing your own money as a part time investor. If you are
| managing other people's money as well as your own, and doing
| it full time, with access to huge datasets and sophisticated
| models, then you are playing a totally different game.
| danielmarkbruce wrote:
| If Tiger Woods says "most people shouldn't try to be a
| professional golfer", he is giving clearly good advice.
| Mikeb85 wrote:
| > I'm curious why you became a "professional investor"
| instead of following your own advice.
|
| Not OP but can answer... It's because if you don't start with
| a massive amount of capital you won't make enough money to
| support yourself. Hence why OP recommended to simply invest
| the time into your own job or start a business.
|
| A 40% return on $100k (which is a great return BTW) is barely
| more than minimum wage...
|
| Meanwhile a few % of a billion $ can sustain a firm.
| shiredude95 wrote:
| in other words dca is the most effective strategy for your
| average investor?
| buzzy_hacker wrote:
| DCA only speaks to the cadence of investment and is often
| contrasted to (and underperforms) lump sum. The strategy as a
| whole could be summed up as investing in low cost diversified
| index funds.
| vikingerik wrote:
| No. Since the stock market goes up on average over time, it's
| always correct by expected value to invest sooner, rather
| than holding money back to DCA in installments. Intentionally
| doing DCA if you have a sum that you could invest sooner is
| trying to time the market.
|
| DCA is a useful side effect when you're investing regularly,
| but on average it does not beat investing sooner.
| scarmig wrote:
| DCA should be thought of as a portfolio strategy that is X%
| in your nominal portfolio and 100-X% in dollars and
| gradually shifting to 100% your nominal portfolio. It's an
| attempt to hedge against negative equities early on, but
| there are better hedges, and if your risk aversion makes
| you not want 100% equities early on, you probably don't
| want 100% equities later on either.
| avvt4avaw wrote:
| No. Invest everything that you can now (into low cost
| diversified index funds or ETFs) and then top it up regularly
| as you get more capital from whatever else it is you do to
| earn a living (e.g. a percentage of your salary every month,
| a percentage of your annual bonus, a percentage of the annual
| dividend from your business etc etc).
| hnxs wrote:
| Do you have any recs? I currently use VTWAX, VTIAX, and
| VTSAX as my index funds. Even split between all three. I
| would appreciate any recommendations on what to change in
| terms of allocation.
| avvt4avaw wrote:
| They are all very good choices.
| bigdict wrote:
| This course covers central banking in great detail:
| https://www.coursera.org/learn/money-banking.
| ulucs wrote:
| Having read threads here on economics I can confidently say,
| don't start by asking a technology forum.
|
| That said, Romer's Advanced Macroeconomics, Acemoglu's Intro to
| Modern Economic Growth and Ljungqvist and Sargent's Recursive
| Macro Theory are good books.
|
| But if you want to be a good investor, just put your money into
| index funds. You'll easily outperform a large majority.
|
| edit: in addition, the topics you're looking for are only _very
| loosely_ related to macro. You 're looking more into monetary
| policy, asset pricing and financial economics. Don't take the
| advice of people who bundle them all together.
| lol1lol wrote:
| I suppose investors want to optimize "we told you before, we
| are right".
| mikewarot wrote:
| Economics is an arena full of entrenched interests who exploit
| information asymmetry and regulatory capture to compete, at
| multiple scale factors. It is my strongly held opinion that
| rational analysis of "Economics" is not possible.
|
| You've got the global scale, where nations compete, best
| described by Beau of the Fifth Column as a game of poker where
| everyone cheats to gain power.
|
| You've got the corporate scale, where the boards of directors are
| political and overlap across most of the Fortune 500. Legally
| they are supposed to act in the Fiduciary interest of investors,
| but that is a polite fiction.
|
| You've got the competing oligarchs, both foreign and domestic,
| engaged in their own egocentric excesses.
|
| You've got the financial sector, which has distorted the price of
| money so hard that it effectively swallowed the economy, that the
| price signal is as effective as light trying to exit a black
| hole.
|
| Not to mention the high frequency trading shenanigan's, where
| front running the market is accepted practice, bots with some
| huge bugs are given control over billions of dollars.
|
| Oh, and the derivatives market, in which any corporation might
| have off the books obligations that exceed the annual sum of the
| world economy.
|
| Economics is truly the dismal science.
|
| PS: I fear I've been too optimistic in my outlook. ;-)
| rramadass wrote:
| Dang! And i thought i had a very bleak view of Economics :-)
|
| PS: https://finance.yahoo.com/news/12-meanest-things-nassim-
| tale...
| roenxi wrote:
| To attach some further cynicism to this comment:
|
| The going rate to buy a "respectable" politician appears to be
| donations in the $10k to $1 million range. Buying an economist
| is going to be much cheaper than that.
|
| Anyone with a bit of money behind them can pay for any sort of
| economics they like. Note that many famous economists are
| vulnerable to financial or political influence.
|
| It is not a safe field for uncovering facts about reality
| without being a confidently independent thinker and researcher.
| ChadNauseam wrote:
| I don't think your logic works. It ought to be very cheap to
| buy a climate scientist too, but despite that the oil
| industry has failed to produce a substantial number of
| climate scientists who don't say anthropogenic climate change
| is real. Economists have broad agreement on issues like rent
| control (they don't like it) and carbon pricing (they do like
| it), and that still counts for something.
| netizen-936824 wrote:
| Probably because all of the climate scientists with half of
| a brain can tell that selling out to oil corporations means
| selling out the future of humanity. It isn't so obvious
| what consequences bad economics has
| bannedbybros wrote:
| aj7 wrote:
| They've had a TON. But they have zero credibility.
| SantalBlush wrote:
| Most of what you've described here is about politics and
| finance, not economics. Econ has pretty much nothing to do with
| sitting on a board or high-frequency trading.
|
| HN is full of users who don't know what econ is but want to
| explain how wrong it is to one another. It's like a parody of
| itself.
| stevenhuang wrote:
| But taking "economics" in isolation like this ignores much of
| what actually happens in reality (the politics part).
|
| It's a large part of why economics as a field is made fun of
| when its models are too simplistic to accurately describe
| reality.
| SantalBlush wrote:
| You're just piling one non-sequitur on top of another. The
| question on this thread is "How can I learn macroeconomics
| properly?" The comment to which I replied was an uninformed
| diatribe that doesn't even come close to answering the
| question. Now you're doubling down on it.
|
| When someone is asking how to learn economics, it would be
| helpful to take it more "in isolation" instead of
| regurgitating the same complaints that we see on HN and
| don't even answer the question.
| goodpoint wrote:
| More like:
|
| HN is full of users who don't know what $thing is but want to
| explain how wrong it is to one another.
|
| (Having said that, Economics is still quackery)
| jonahbenton wrote:
| This is the correct answer.
| baryphonic wrote:
| It sounds to me like you're interested in "financial economics"
| or "money & banking."
|
| Having an interest in these topics myself, I find that they are
| less about macroeconomics as a whole, which, in the mainstream
| formulation, is about national income accounting, aggregate
| demand, general equilibrium, production functions, the business
| cycle, etc., and are more about the microeconomics of particular
| markets e.g. the market for money, the market for bonds. I'd have
| a solid grasp of microeconomics, and then learn national income
| accounting (`C + I + G + X - M = Y` i.e. the sum of consumption,
| investment & government spending, less imports equals the
| national income (GDP/GNP), as well as the capital accounts
| identities), some ideas about the business cycle and maybe a bit
| about aggregate demand. Then I'd dive into something purely about
| money and banking. You'll have the tools you need to think about
| how markets work, and ideas like the efficient market hypothesis
| should make sense (within the frame of the model).
|
| I learned this stuff in school, so it's hard for me to give great
| concrete advice beyond topics, but I've heard good things about
| Sowell's "Basic Economics," Malkiel's "A Random Walk down Wall
| Street," and then a personal favorite of mine Vernon Smith's
| "Rationality in Economics." The latter is truly insightful, but
| might be difficult if you don't have some of the ground matter
| (e.g. "what are supply and demand?" "What is a firm?") covered
| first.
| balaji1 wrote:
| think this is first useful response. Everybody else saying "you
| don't need to be interested in that" to the OP's question. It
| may be true that macro is irrelevant to the OP's objective of
| being a good investor.
|
| I will check out your suggestions. Curious, is it useful at all
| to understand macroeconomics at a high-level? How does it
| affect individuals and families in the middle class? Who is in-
| charge of the macroeconomics of countries and how do we trust
| them to do the right thing?
| bmitc wrote:
| > I want to be at an expert level of knowledge in
| predicting/understanding what feds, markets, rates are gonna do
| and why.
|
| If you wouldn't mind letting me know when you figure this out,
| let us all know. :)
|
| In all seriousness, I think learning complexity science is a good
| step to learning macroeconomics.
| aplause wrote:
| There are lectures on macroeconomics by Krassimir Petrov on
| youtube:
| https://www.youtube.com/watch?v=o1BDk5Uyy8I&list=PLesgViD0jh... I
| followed his lectures on microeconomics and found it good, but I
| haven't started macroeconomics yet.
| coeneedell wrote:
| It's probably not a good sign for the future of hacker news that
| the all the real responses are sinking to the bottom of this
| comment-space and the top two comments are cynical anti-
| intellectual tirades.
| bannedbybros wrote:
| [deleted]
| leonroy wrote:
| My Economics A-Level helped me immeasurably in understanding the
| basics of macroeconomics, supply, demand, fiscal and monetary
| policy and the most valuable (for me at least) opportunity cost.
|
| I've used Khan Academy to quickly get up to speed on totally
| unfamiliar topics. Seems they have a Macroeconomics course,
| probably a good place to start:
| https://www.khanacademy.org/economics-finance-domain/macroec...
|
| Beyond that Investopedia is a fantastic resource for looking up
| the meaning behind financial terms.
|
| Best book I've read on investing is A Random Walk Down Wall
| Street by Malkiel - if you're prepared to dive into Investopedia
| to explain the new concepts you'll inevitably encounter in books
| of this type you'll learn a lot:
| https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street
| HershheleGibbs wrote:
| cocoflunchy wrote:
| I tried to follow https://mru.org/ for a while and I liked the
| format.
| luciusdomitius wrote:
| Honestly. Start with learning what very basic economics is -
| "Wealth of Nations", "Human Action", etc and then try
| extrapolating your perception based on mastery of the principles.
| In practice this means deciding for yourself.
|
| Modern macroeconomics is an extremely controversial field to say
| the least and if you start from top (the propaganda-like crazy
| statements that both sides make), the result would be that none
| of the viewpoints would ever make any sense to you :)
| unmole wrote:
| Starting with Wealth of Nations in 2022 is a very odd choice.
|
| Manikw and Krugman are on the opposite aisles of the political
| divide. But you'll find the same content in both their
| textbooks. Basic macro is not even remotely controversial.
| adventured wrote:
| Keep your focus primarily on the business you're interested in
| owning part of. Devour their quarterly reports, learn their
| business. That's a lot more important than trying to be an expert
| in macro economics. You only have so much time, macro economics
| is not a prime value point of focus. Be an expert - to the extent
| an outside investor can be - in the business you're buying into.
|
| Predicting what the Fed is going to do is relatively easy. Look
| at the US debt. It's trivial to know what the Fed can and can't
| do accordingly. They're bound tightly. Beyond that, who cares if
| the Fed hikes rates by a quarter point. These things are
| meaningless if you're a serious long-term investor. If you're a
| flipper, a short-term trader, sure then it matters, because
| you're looking to trade on waves of short-term sentiment.
|
| The Fed can: talk a lot about how they plan to raise rates, to
| try to talk asset bubbles down or otherwise restrain them. They
| use this bullshit talking approach a lot. They start jabbering
| about how they plan to raise rates far ahead of when they
| actually do it. They leaned on that con heavily after the great
| recession and stretched it a long ways, and they're still relying
| on it. That's because they can talk a lot and can't take a lot of
| actual action. Somehow the morons on Wall Street still haven't
| figured this out, that clown show still thinks the Fed can hike
| rates consequentially.
|
| The Fed can't: actually raise rates by very much, because it'll
| crash the economy, smash the big asset classes, and make the
| giant pile of US debt more expensive (which the US Government
| can't afford to do).
|
| Inevitably by the time the Fed gets around to a modest actual
| hiking program, we're in or near another recession, and like
| magic rates go back to zero, they get their excuse to reverse
| course (something always happens eventually, something they can
| point to to stop the hiking process).
|
| The Fed and rates are one of the easiest parts of the equation.
| You can know generally what they're going to do over the next few
| decades, because you know their constraints. And you can know
| what the outcome of their behavior will be (Japanification + more
| asset bubble cycles).
|
| Yeah, but what about inflation? Increasingly huge mountains of
| debt (which, up to a point, act as a potent heat sink for robbing
| economic expansion and inflationary pressure) plus mediocre US
| and global growth will drain that problem given a relatively
| short amount of time. The US is facing Japanification, not
| persistent 1970s style traditional consumer inflation. We'll be
| back to hearing about how the Fed would like to spark higher
| levels of inflation (ie they'd like to debase more of the US debt
| away faster).
| box_out wrote:
| Jordi Gali's book is a great place to start for monetary policy
| and the Fed [1]. Speeches and working/white papers from the Fed
| board and regional banks cover topics that are immediate for
| policy but outside the scope of a macro textbook. IMF and BIS
| papers also very topical
|
| For more on macro models, from a central bank perspective, Smets-
| Wouters and FRB/US are two workhorses. Ljungqvist and Sargent
| will enable you to read academic journal articles
|
| [1]
| https://press.princeton.edu/books/hardcover/9780691164786/mo...
| imakwana wrote:
| This might be a specific aspect of Global Macro investing, but if
| you are interested in Risk Parity strategies (as popularized and
| adopted by Bridgewater), below two books by Alex Shahidi of Evoke
| Advisors cover Risk Parity asset allocation in great detail:
|
| 1) Risk Parity: How to Invest for All Market Environments
|
| 2) Balanced Asset Allocation: How to Profit in Any Economic
| Climate
| TimJRobinson wrote:
| https://youtu.be/NVnbFQjqh5o is a good overview - Raoul Pal
| really knows his stuff
| landemva wrote:
| He seems to say enough stuff that some of it ends up being
| correct. He seemed to be wildly wrong on timeframes of some
| calls.
|
| https://www.reddit.com/r/investing/comments/geztt6/why_do_pe...
| rr808 wrote:
| Raoul is great, and its always good to hear from industry
| professionals (rather than bloggers or people who sound like
| they know but only ever worked as an engineer or whatever) He
| is a salesman though and seems a bit of a shill now.
| blitzar wrote:
| Raoul was excellent, and I can highly reccommend any of the
| pre ~2019 content - he is now a born again Crypto shill.
| forgotmyolduser wrote:
| Peter Schiff has a great podcast. One year listening to him, you
| will understand many things about our world. I really recommend,
| and even if this gets downvoted / trashed, have a listen by
| yourself.
|
| https://www.youtube.com/channel/UCIjuLiLHdFxYtFmWlbTGQRQ
| jrm4 wrote:
| First and foremost: Understand that what you're trying to study
| here is "astrology for business," and I suppose I'm equally
| trying to punch up astrology as I am trying to punch down macro.
|
| There might be some useful insight you can gain by going through
| the motions of studying it but -- the value to learning it by the
| people who practice isn't _accuracy._
|
| (source, ivy-league econ degree holder here)
| [deleted]
| anm89 wrote:
| There are 2 groups of people who spend a lot of time thinking
| about macro economics.
|
| 1) Professors who compete for prestige and make fun sounding
| theories like MMT and tend to have very little skin in the game
| if their theories create value.
|
| 2) Portfolio managers who stand to make or lose enormous sums of
| money if they can make detailed and accurate predictions based
| off of macroeconomic analysis.
|
| I'd rather spend my time listening to group 2. If you want to
| listen to what people like that are thinking about markets in
| real time, there are plenty of youtube channels and podcasts
| where you can do that:
|
| Recently my favorite is blockworks Macro (diverged off a crypto
| channel but this is their non crypto macro content)
| https://www.youtube.com/channel/UCkrwgzhIBKccuDsi_SvZtnQ
|
| If you want to understand what some of the lingo and concepts
| mean, NPRs whiteboard series is where I send most people
|
| https://www.youtube.com/watch?v=qF11rk1M_Rw&list=PLA33D9F40D...
|
| Source: I have a degree in economics and trade my own money.
| techsin101 wrote:
| good distinction. 'applied' macroeconomics is what I really
| want
| [deleted]
| SnowHill9902 wrote:
| Most will never say the truth or the whole truth in public
| unless you are paying them or they can back their words with
| their portfolio. "Show me where your money is."
| waylandsmithers wrote:
| Not an economist but majored in economics for undergrad,
| including macro, international, and public economics.
|
| I think it's great for people to learn about macro but I don't
| think you're going to get what you are looking for out of this
| with regards to investing- economists are generally good at
| studying and trying to explain why things happened in the past.
| Like any other group of people, they're not very good at
| predicting the future, and certainly not the stock market.
|
| Among the most amusing wrong predictions to me is a theory that
| was gaining steam in 2006 was that there hadn't been a recession
| in a while, since the dot-com bubble, maybe because newer
| companies would do all their design and research for themselves
| but outsource the manufacturing, so could withstand decreases in
| demand. And as a result, maybe there just wouldn't be any more
| significant recessions in the US.
| virtue3 wrote:
| never underestimate the "hold my beer" effect.
| yt-sdb wrote:
| Perry Mehrling's "Money and Banking" [1]. What I enjoyed about
| this course is that Mehrling focuses on how the economy works
| _mechanistically_, on what is actually happening on balance
| sheets throughout the economy. For me, this really pulled back
| the curtain on exactly the stuff you mention above (interest
| rates, central banks, QE).
|
| [1]
| https://www.youtube.com/watch?v=KNEouYM5wRE&list=PLSuwqsAnJM...
| bigdict wrote:
| Upvoting, I enjoyed the course as well.
| ra7 wrote:
| This is the closest to what OP is asking. This course is easily
| digestible for anyone without a background in finance.
| TomGullen wrote:
| Not "Properly" but I find Economics Explained on Youtube very
| educational and insightful, and to my limited knowledge quite
| balanced and well researched:
| https://www.youtube.com/channel/UCZ4AMrDcNrfy3X6nsU8-rPg
| mcsalgado wrote:
| Economics Explained got some of the worst analyses I've seen on
| youtube, like that one video he asserts that the Netherlands is
| the most unequal country in the world.
| https://www.youtube.com/watch?v=tW_kw6OPXc0
| bigbillheck wrote:
| > I want to be at an expert level of knowledge in
| predicting/understanding what feds, markets, rates are gonna do
| and why.
|
| What are you planning on doing with this? Investing?
|
| You've got an opportunity cost here. You can either spend a lot
| of your surplus effort on learning macroeconomics in the hopes
| that it'll enable you to spend a lot of time in the future making
| investment decisions that might let you time the market a little
| better. Alternatively, you could just put your money in index
| funds and spend that effort on improving your standing in your
| current profession so as to make more money which you could then
| invest in those index funds.
|
| Which one is going to give you the biggest return by the time
| you're old and ready to retire? What kind of life do you want to
| lead?
| shaftoe444 wrote:
| The free online courses at Marginal Revolution University
| delivered mostly by Tyler Cowen and Alex Tabarrok are good imo.
|
| https://mru.org/principles-economics-macroeconomics-0
| gigatexal wrote:
| Go to a prestigious school? I dunno. Macro Econ is more policy
| and less baked in the math compared to micro. I think the
| fundamentals in micro are more rigorous though the one tenant of
| the whole field -- that people act rationally and seek to
| maximize their utility on things -- is bogus. People are dumb or
| at least often irrational. Groups of people though might act
| rationally. I think the modeling for micro that makes the most
| sense is the theory behind firms and how firms operate.
| mym1990 wrote:
| Truthfully, if studying economics was a way to predict market
| movements in the future, the field would be much, much more
| popular, and lucrative. The last 3 years has shown that everyone
| feels smart when everything is going up in a bull market(minus
| the last 6 months). If you can make money in a downturn, then you
| might be onto something.
|
| Macroeconomics can still help you tremendously, but it is only a
| small piece of the puzzle. For long term success, I would
| recommend that you pick an industry and study that industry to
| its core. Become an expert in energy markets, or financial
| markets, or travel/transportation...etc.
|
| Economic policy and climate will affect different companies in
| different ways, and its an enormous task to understand how
| economic variables affect all industries.
|
| You have to think, even the Fed doesn't know what their policies
| will bring. They deal in possibilities and probabilities, and
| move very slow to not break everything.
| lordnacho wrote:
| Hedge fund guy here.
|
| Every desk I ever sat on talked about macro, but none of them
| ever made any money from it. Equity options, fixed income (the
| home of macro traders), trend following, HFT, and so on.
| Everybody throws around macro vocab, nobody has anything
| resembling an idea of how it affects markets. Or rather, nobody
| has a convincing framework for how things connect. Bonds, STIRs,
| Fed Funds rates, inflation, growth, unemployment, all that, all
| you ever seem to get is individual stories that sound good but
| that don't fit into any kind of explanation of how the economy
| works.
|
| I did a degree in economics too, and unsurprisingly that also did
| not bring everything together. Contrast that with eg
| thermodynamics where over time all the stuff makes sense, and it
| even connects with information theory.
|
| Even if you did have a coherent macro story, you would struggle
| to answer the most important question: What is priced in? This is
| mostly a question about local dynamics rather than macro. Why are
| used cars expensive? What about chips? What about bonds and
| currencies and so on? All things that you can learn about, just
| not in a macro book.
| rkmoniofficial wrote:
| been a long day https://www.rkmoniofficial.xyz
| bachmeier wrote:
| The best (as in not trying to sell you something, not pushing a
| political agenda, and not a bunch of weird conspiratorial
| philosophy) source for what you are after is listening to this
| podcast: https://macromusings.libsyn.com/ If you want to learn
| more about something you hear there, dig deeper.
| timwaagh wrote:
| Read Blanchard, I guess.
| 0daystock wrote:
| George Gammon on YouTube has easy to understand (maybe too
| simplified for engineers) videos on macroeconomic topics. There's
| a bit of conspiratorial/doomsday spin to the content (probably to
| get more views), but if you can look past hyperbole, you may find
| the rest very informative and helpful.
| jshaqaw wrote:
| With full warning that it is heterodox, stock-flow macroeconomic
| models (lots here on it at the Levy Institute:
| https://www.levyinstitute.org/publications/a-stock-flow-appr... )
| is another framework for macroeconomic thinking which is a great
| supplement to traditional equilibrium-based approaches. I happen
| to find stock-flow models resonate better with my own intuitions.
| yuppie_scum wrote:
| Go to your local library and check out some Econ books. There's
| got to be some Econ classes available online as well.
|
| Economics is one of the most important disciplines to understand
| even at a base level. So much of the world and human behavior can
| be explained in terms of supply and demand.
| markus_zhang wrote:
| I think you are more interested in knowing how policy makers
| react to macroeconomics situation. I believe reading economical
| history is a good start. Definitely not an expert myself.
| aj7 wrote:
| This is one of the hardest and least productive approaches to
| investing. Basic skills in general security analysis, knowledge
| in depth of a number industry sectors, and seat-of-the-pants
| experience that comes only with real money bets in the market
| trump macroeconomic analysis.
| softcactus wrote:
| I personally really like Martin Shkreli's advice on investing
| which is the same as Buffett and Graham's investing principles:
|
| 0. Don't try to make your money investing, learn a skill and
| develop it to get paid.
|
| 1. Find an undervalued company. Calculate the value of a company
| using DCF and be conservative. Try to buy at a high discount
| rate-- a dollar for $0.50
|
| 2. Just dollar cost average into your value picks and index
| funds. Don't try to time the market ever. All of your holdings
| should have a large enough time horizon that a 3-year bear market
| is a blip on your radar.
|
| I think anything regarding an understanding of macro econ is
| going to be speculative, i.e. not actually based on the intrinsic
| value of a security, but trying to chase inflows and outflows of
| capital, which is the opposite of investing.
|
| I am a baby in the world of money but the two books that I
| thought were amazing at de-mistifying investing were the
| Intelligent Investor and the Little Book of Valuation. Also
| Martin Shkreli's series of livestream videos on valuation are
| very entertaining and free on Youtube.
| ericvanular wrote:
| "Properly" is a debatable term in the world of economics since
| its not a hard science. The best we can hope for is to gather
| many different perspectives and combine them into a reasonable
| blended average.
|
| If it helps you at all, I just published a new post on rising
| interest rates, what effects they might have and how you might
| cope better with them: https://ericvanular.com/rising-interest-
| rates
| tomrod wrote:
| Pick up a Mankiw textbook for Macro 101. Avoid anything from
| George Mason and affiliates like FEE as they are ideologues in
| their approach.
| [deleted]
| curiousgal wrote:
| I distinctly remember the first lesson of my macroeconomics
| class. It was simply about how to judge and discuss ideas. The
| reason being that there are multiple schools of thoughts and the
| most important thing you can learn is how to judge the merits of
| each on your own.
| TradingPlaces wrote:
| Greg Mankew's textbook is the best for intro imo. Not cheap.
|
| https://www.amazon.com/Macroeconomics-N-Gregory-Mankiw-ebook...
| tomrod wrote:
| Widely distributed as a pdf if you're not interested in funding
| Mankiw. Thst said, I think it is one of the better
| introductions to the topic.
| colinmhayes wrote:
| free here
| https://jollygreengeneral.typepad.com/files/n.-gregory-manki...
| lifefeed wrote:
| I don't know what your general knowledge of economics entails, so
| this might be obvious, but the back half of Principles of
| Economics by N. Gregory Mankiw covers how a lot of those pieces
| are interrelated.
|
| (Bonus tip: buy an international edition on eBay. It's the same
| content.)
| amalcon wrote:
| I don't think it's _possible_ to learn macroeconomics
| "properly", in the sense that one can learn e.g. quantum physics
| "properly". I pick quantum physics because not every expert
| agrees on some of the tail end of theoretical things, but there's
| broad agreement on the main parts of it. Those main parts are
| more than the average person will ever need to use.
|
| This is not remotely true with respect to macroeconomics. It's
| absolutely routine that you can find even two orthodox economists
| (or hedge fund managers, or other practical folks if you prefer)
| who look at the same situation and predict incompatible outcomes.
| You don't even need to go down the various heterodox rabbit
| holes; people ostensibly operating from the _same_ theory
| routinely make _opposed_ predictions.
|
| It's still worth learning some of the vocabulary, because it is
| useful for understanding what people are talking about. Of course
| learning is also gratifying for its own sake, and don't let
| anyone dissuade you if that's what you're up to. Still, I don't
| think it makes sense to learn macroeconomics on an expert level
| for a practical purpose. I don't think it's possible to define
| what an "expert level" even is.
| hotpotamus wrote:
| The saying goes, "if you want three opinions, ask two
| economists looking at one set of data".
| arethuza wrote:
| _" Give me a one-handed economist! All my economists say 'on
| the one hand... [and then] on the other.'"_
|
| President Truman
| onionisafruit wrote:
| You can still learn the theories. Even though they disagree
| most economists can look at some data and agree what Hayek,
| Keynes or Friedman would say about it.
| ChrisLomont wrote:
| >there's broad agreement on the main parts of it
|
| >This is not remotely true with respect to macroeconomics.
|
| Macroeconomists agree largely on most econ topics. Probably
| anything you'll find in undergrad (and most grad) macro
| textbooks the majority will agree on.
|
| As evidence, here's [1] a useful site with polls dating back a
| decade of ~100 of the world's leading economists. Even on these
| hard questions you'll find they tend to agree quite well. They
| agree even more on topics not as near the fringe as these
| questions.
|
| [1] https://www.igmchicago.org/igm-economic-experts-panel/
| danielmarkbruce wrote:
| The agreement v disagreement thing is a symptom of:
|
| Macroeconomic models can't predict the future.
|
| The agreed upon physics models can predict the future to a
| crazy high level of precision. Even the ones we know are not
| 100% accurate.
|
| So, it's basically a waste of time to spend too much time
| learning macro. It's largely useless.
| aaronrobinson wrote:
| I recommend watching the pensioncraft videos on YouTube, created
| by an ex USB macro strategist
| vmurthy wrote:
| Did you mean UBS perhaps? :-)
| Jugurtha wrote:
| That's where USB Type C shines. It works whichever way you
| plug it. /joke.
| Parker_Powell wrote:
| Before I answer the question, let me preface this by saying that
| I'm no expert.
|
| I've always felt that macroeconomics is a subject that's best
| learned from a tutor. There are so many different concepts in
| macroeconomics that you need to get a good grasp on. Each of
| these concepts are equally as important as each other and there
| are so many of them that it's hard to learn everything on your
| own. You can read all the textbooks and see all the YouTube
| videos you want but there is nothing like having someone highly
| specialized teach you the material and help you apply it.
|
| If you don't have the time or money for a tutor, try taking a
| macroeconomics course at a local community college. This option
| will be cheaper than hiring a private tutor but still provide you
| with the guidance and direction you need to learn macroeconomics
| properly.
|
| Best of luck!
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