When looking at global macro investing it is useful to first define it. Macro trading is simply looking across the globe and across asset classes to determine where are the best opportunities on an absolute and risk adjusted basis. If the Ghana stock market looks great then invest there. If US Treasuries look good then trade them. If the Russian Ruble looks like it will be devalued then short it. Basically do not use any artificial constraints and simply invest where the money is.



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.

Of course if you believe the school of Chicago thought that the markets can't be beat then you probably think that being in a US stock index fund such as the SP500 is a good bet and you will sit there. Of course while you may eventually make money doing this you also need a long holding period. What the indexers fail to tell you is that the markets have gone nowhere for 20 years at a time more then once. That means you may have to wait for year sot make any money at all.

Lets look at some of the problems with the by and hold approach. If you buy hold stocks the truth is that you would have suffered negative returns from 1962-1982 and from 1997 to 2008 so far. That doesn't include the depression or inflation which makes it even worse. So unless you are immortal you will need to find a better solution to reach any financial goals.

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.

What you don't like sitting on losses for 10 years straight? Ok then you will need a new approach. Global macro trading allows you to go where there is opportunity and not sit hoping it knocks on your door. We are out hunting for returns wherever they may be and not where they are not. Look into Global Macro Investing as a strategy and as a way of life.