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 considered the asset class of last resort. You go to cash when you don't have anywhere else to put your money. Remember that we want great risk to reward situations, so when we can't find one we sit out in cash.
Stocks are next and they are also probably the most followed asset class. We have all heard of the Dow Jones and the NASDAQ. While stocks are a great and exciting asset class they aren't the only game in town.
Bonds also known as fixed income are a very important part of the macro traders arsenal. You can trade domestic government bonds, corporate bonds, foreign government bonds, and foreign corporate bonds. There is a lot of opportunity here and you would be remiss not to look at them.
Next on the list are commodities. Commodities include precious metals, base metals, energy complex, agricultural goods, and livestock. Basically global macro trades lumber, oil, gold, etc if the risk to reward is in place.
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.
So what of the other assets classes? Well they tend to be less liquid so you need a lot of money to trade them well. For instance you can make a lot with real estate but you need to have a long time horizon. Same goes for art, venture capital, and private equity. You can trade this stuff but it takes a different time frame then most investors are used to. - 23210
Cash is considered the asset class of last resort. You go to cash when you don't have anywhere else to put your money. Remember that we want great risk to reward situations, so when we can't find one we sit out in cash.
Stocks are next and they are also probably the most followed asset class. We have all heard of the Dow Jones and the NASDAQ. While stocks are a great and exciting asset class they aren't the only game in town.
Bonds also known as fixed income are a very important part of the macro traders arsenal. You can trade domestic government bonds, corporate bonds, foreign government bonds, and foreign corporate bonds. There is a lot of opportunity here and you would be remiss not to look at them.
Next on the list are commodities. Commodities include precious metals, base metals, energy complex, agricultural goods, and livestock. Basically global macro trades lumber, oil, gold, etc if the risk to reward is in place.
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.
So what of the other assets classes? Well they tend to be less liquid so you need a lot of money to trade them well. For instance you can make a lot with real estate but you need to have a long time horizon. Same goes for art, venture capital, and private equity. You can trade this stuff but it takes a different time frame then most investors are used to. - 23210
About the Author:
The Macro Trader does research for a newsletter that gives the Global Macro Trader actionable trading ideas each week. 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 @ 1:32 AM
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