I was intrigued by this recent comment in a JP Morgan piece of research concerning the biggest trends in finance:
- The macro-ization of the investment landscape (‘macro” investors have always existed but just as the tech boom and bust created a permanent pool of money that to this day focuses on that industry beyond what its market cap and earnings contribution would justify, the same has happened to “macro” events. The ’08-’09 US and ’09-’12 Eurozon crisis has resulted in a market in which nearly everyone attempts to view the world through a macro lens and this intensifies and exacerbates price swings in equities, FI, FX, etc).
Hmmm. They seem to think this is a flash in the pan trend. I’d argue precisely the opposite. The growth in focus on macro events is merely a reflection of the world we live in. Thanks to technology and hyperglobalization the world has become a very small and interconnected place. As a result we’re seeing events in foreign markets impact domestic markets like never before.
If anything, macro is only becoming more and more important. This is far from a short-term trend. Technology and hyperglobalization will only magnify the impact of macro trends in the coming decades.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.