Investing From the Top Down: A Macro Approach to Capital Markets
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In Investing from the Top Down, Anthony Crescenzi, esteemed financial author and chief bond strategist for Miller Tabak & Co., explains how to develop new, highly effective investment strategies by taking a macro view of the factors shaping industries and markets. Emphasizing the importance of economic and market cycles (as opposed to a bottom-up approach, which places valuation ahead of the big picture) top-down investing is better suited for today’s global economy and will likely become the dominant strategy in the future.
Introduction:
The world has become more complicated than it used to be, and investing has certainly become more complicated too. Luckily, there has evolved a way to empower investors and make investing simpler, a way of investing that has been around for ages but which only recently has reached critical mass and made it possible for everyone to use. Such is the promise of top-down investing, an investing concept that relies upon indicators which carry implications that are crystal clear and highly dependable thus making it relatively easy to devise investment strategies, especially for those with very little understanding of balance sheets or the world of finance in general. It is an investment approach that also fits perfectly with the evolution of our society, where attention spans for just about everything from television to newspapers and board games have shrunk. It is thematic investing, where an investor buys an idea first and then buys the stocks, bonds, currencies, real estate assets, and other forms of investment that fit with the idea.
Top-down investing is an investment approach that has a multitude of advantages over other styles of investing, including its for-midable counterpart, bottom-up investing, which relies mostly upon value investing, an investment approach that begins with scrutiny of the asset being bought. For example, in the case of corporate equities, a bottom-up investor would start with the idea that company XYZ might prosper enough to justify buying shares in the company which appear to hold value relative to the company’s prospects. From there, the investor would analyze the company from the “bottom up,” looking particularly at the company’s balance sheet, its cash flow projections, and so forth, and do so in the context of the share price to decide whether the shares are worth investing in. Yes, this takes a lot of work, and if you do the work, you probably will choose a fairly good number of investments that work. Given the rewards, it seems we should all do the work to ensure that we are making the best possible investment decisions.
The problem with bottom-up investing, however, is that investors don’t always have the tools to take on such a task nor do they have the time. How many of us truly know how to pick apart balance sheets? Who really wants to? Who in this day and age really has the time? I say, free yourself from this burden because top-down investing has proven itself to be a terrific way to formulate an investment strategy, and it is a strategy better suited for the twenty-first century than other styles of investing. I make this clear throughout this book.
Contents:
- Top-Down Investing Has Arrive
- The 2007 Credit Crisis: A Case in Point
- Globalization Makes Top Down a Must
- Thematic Trading and Investing
- Thematic Investing Using ETFs
- Central Banking Is a Top-Down Affair
- Filling the Gaps on Value Investing
- Diversifying Your Portfolio from the Top Down
- Do the Math!
- Other Reasons to Invest from the Top Down
- Sector Performance Is King
- Market Sentiment Is a Top-Down Affair
- A Golden Age for Macroeconomics Has Arrive
- The Top 40 Top-Down Indicators
Investing From the Top Down: A Macro Approach to Capital Markets By Anthony Crescenzi pdf
| Author(s) | |
|---|---|
| Format | |
| Pages | 301 |
| Publication Year | 2009 |
9 reviews for Investing From the Top Down: A Macro Approach to Capital Markets
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Marcos Singh (verified owner) –
A worthwhile read
Darwin Wade (verified owner) –
I was more than a little disappointed with this book as I thought it might actually describe some strategies the author uses to invest from the top down, or even a process. Instead half the book is filled with reasons why you should invest from the top down. Wow!!! Great job Anthony, but dont you think the purchasers of the book are already interested in top-down investing? Inside the house of money, The Alchemy of Finance, Mr Market Miscalculates are all better choices.
The only good thing about the book is that is stresses you should do your own research (agreed) and it tells you some websites where to do so (BIS, Fed in Print, World Bank, etc).
Nonetheless, if you read finance/investing/trading books in the hope of getting just 1 or 2 good ideas, this book will probably have something for you. Just don’t expect anything earth-shattering.
Brynlee Gallagher (verified owner) –
So much useful information in this book if you are looking at a top down approach you need this in your library.
Aviana Larson (verified owner) –
there is nothing practical in this book. complete waste of money. it’s saddening to see valuable resources (papers) wasted on this useless book.
Alina Everett (verified owner) –
One of the key lessons of the financial crisis is that macro-related factors can overwhelm all other factors and influence the performance of both the financial markets and the economy. Investing from the Top Down gives investors tools that they can use to either augment their current approach to the markets (for example, the popular bottom-up, value-style investing approach), or to adopt as their main investment approach. Critics of the book have thus far missed the point of the book, which is to first argue why it is such a good approach and show how to apply some of the best tools toward making optimal investment decisions.
Within Investing from the Top Down you will find solid examples of where top-down investing worked in the past and how it works on an on-going basis. There is specificity, for example, within the section on the indicators–dubbed “golden compasses,” that details what the indicators are best used for and the specific investment strategies to consider depending on the behavior of the indicators.
Few books have been written about top-down, macro-style investing save for the recounts of select macro stars such as George Soros. The book therefore has a rightful place in the world of solid investment books.
Camilo Soto (verified owner) –
lots of space (time) spent on criticizing opposite investment strategies, i.e. Value Investing. But very interesting tools and nice key takeaways closing chapters.
Jax Cobb (verified owner) –
An outstanding macro economic book from a master in the craft.
Anthony Crescenzi was responsible for revising Stigum’s Money Market and carries his level of dedication and expertise to this work.
How much better I would’ve been had I been able to study a book like this 5 or 10 years ago and seen the coming crash that began in 2007.
One issue that keeps it from being 5 starts. The Golden Compass list includes several indicators that are not available without subscription. That has frustrated me as I have tried to accumulate as much data from the Golden Compass indicators he recommends and chart and analyze them to where they can be integrated into my investing. It would be nice to acknowledge this and suggest possible alternate sources.
The text and discussion leading up to the Golden Compass chapter(s) is outstanding and very well written and easy to read.
Luella Burke (verified owner) –
All smart investors know that 1) Wall street is infested with SHARKS and 2) Most corporations are being run by a bunch of CROOKS. With that reality in mind, it is then a fact that long term buy and hold is dead and only a FOOLS play. The only game in town is hit and run and this book shows you how to identify the trends that can make you big money. GOOD BOOK
Evie Gross (verified owner) –
No problems, the way I like it