Economics/Investing

Well continuing off from the previous conversation , a pure microeconomics background or a macroeconomics background will yield you some poor results. What is needed is a synthesis of a multitude of disciplines to effectively operate in those fields.

Edit: Macroeconomics is simply not THAT much better

Depending on where you learn your stuff from you will usually have a narrow , specialized mind. Maybe like those who graduate from Harvard Ungrad or hell , even their MBA school. Personally I learned about interest rates , how they correlate with bond prices. Along with how derivatives work , options , stock equites. And unless you want to become a economist for either the US government(along with any other country's government) or work at a firm who advises and forecasts GNP/GDP it really is unpractical. A firm understanding on how to evaluate companies along with those investment options will yield you with 1) Better results (Cash wise if you decide to invest) 2) Practical knowledge that would be useful at a corporation

But if you don't know the economy works on a grander scale, it can be hard to pinpoint your location and react to economic slumps and such.

the Greatest economist of our time, John Maynard Keynes was a macroeconomist, and his portfolio, after the Great Depression, was so great that he died the second richest economist ever.

If you know how to evaluate a company properly a economic slump won't hurt along with avoiding slumps is damn near impossible.


From speculator to investor

Keynes began as a run-of-mill speculator and trader, trying to anticipate trends and forecast cycles. Things didn’t go too well. The Great Crash of 1929 wiped out nearly 80% of his personal net worth.

That proved to be his epiphany. The crash turned Keynes from a speculator to a genuine investor. Trading the market demanded “abnormal foresight” to work, he concluded. “I am clear,” he wrote, “that the idea of wholesale shifts [in and out of the market at different stages of the business cycle] is for various reasons impracticable and undesirable.”

He now focused more on individual securities and less on trying to forecast the market. He summed up his new philosophy in a note to a colleague: “My purpose is to buy securities where I am satisfied as to assets and ultimate earnings power and where the market price seems cheap in relation to these.”

He also became more patient in his pursuit of returns. Keynes decided it was easier and safer in the long run to buy a 75-cent dollar and wait, rather than to buy a 75-cent dollar and sell it because it became a 50-cent dollar — and hope to buy it back as a 40-cent dollar.

When the market fell, Keynes remarked: “I do not draw from this conclusion that a responsible investing body should every week cast panic glances over its list of securities to find one more victim to fling to the bears.”

He learned to trust more in his own research and opinions, and not let market prices put him off a good deal. Investing, he said, is “the one sphere of life and activity where victory, security and success is always to the minority, and never to the majority. When you find anyone agreeing with you, change your mind.”

i wasn't talking about being an investor, i was talking about running a business, that knowing macroeconomics might help you adjust, i just threw keynes in there because he was a famous macreconomist.