Global Macro Trading and Asset Class Diversification
There are ten asset classes that are regularly traded by global macro investors. Real estate, venture capital, equities, currencies, commodities, cash, bonds, collectibles, statistical arbitrage, and private equity. While a few of these are tough for individual investors to get into, the majority are easily accessible.
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.
Fixed income, also known as bonds represent loans to a government or business. When you loan money you receive interest in exchange. Anyways most global macro traders trade US government, foreign government, corporate, and even low grade corporate bonds. They have different drivers so they provide more trading opportunities.
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.
The largest asset class is that of currencies. Currencies have long been one of the primary trading assets for macro traders. If you have an opinion on one country versus another then you have a basis for a trade. If the reward outweighs the risk then you can have another asset class to trade.
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. - 23204
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.
Fixed income, also known as bonds represent loans to a government or business. When you loan money you receive interest in exchange. Anyways most global macro traders trade US government, foreign government, corporate, and even low grade corporate bonds. They have different drivers so they provide more trading opportunities.
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.
The largest asset class is that of currencies. Currencies have long been one of the primary trading assets for macro traders. If you have an opinion on one country versus another then you have a basis for a trade. If the reward outweighs the risk then you can have another asset class to trade.
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. - 23204
About the Author:
The Macro Trader helps investors find great Global Macro Trading opportunities. Tactical Asset Allocation 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 @ 1:52 AM
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