| 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. |
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.