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 considered the asset class of last resort. You go to cash when you don't have anywhere else to put your money. Remember that we want great risk to reward situations, so when we can't find one we sit out in cash.
Stocks are next and they are also probably the most followed asset class. We have all heard of the Dow Jones and the NASDAQ. While stocks are a great and exciting asset class they aren't the only game in town.
Bonds also known as fixed income are a very important part of the macro traders arsenal. You can trade domestic government bonds, corporate bonds, foreign government bonds, and foreign corporate bonds. There is a lot of opportunity here and you would be remiss not to look at them.
Commodities are another hot spot in the macro arsenal of asset classes. While the term is broad the trading is even broader as you can trade energy, agricultural products, livestock, metals, and even precious metals. If you can pick it up or eat it you can trade it. This is a good thing as it gives us more potential trade opportunities.
Finally we get to currencies. This is actually the largest asset class out there and gives some of the best trading opportunities. If you have an opinion on any country you can buy or short the currency and try and make money.
Finally we have venture capital, private equity, real estate, and collectibles. These assets are tradeable with one major caveat, and that is that they are not very liquid. Whereas you can unwind a billion dollar currency trade in minutes, it can take days and weeks to get out of real estate and private equity investments. - 23199
Cash is considered the asset class of last resort. You go to cash when you don't have anywhere else to put your money. Remember that we want great risk to reward situations, so when we can't find one we sit out in cash.
Stocks are next and they are also probably the most followed asset class. We have all heard of the Dow Jones and the NASDAQ. While stocks are a great and exciting asset class they aren't the only game in town.
Bonds also known as fixed income are a very important part of the macro traders arsenal. You can trade domestic government bonds, corporate bonds, foreign government bonds, and foreign corporate bonds. There is a lot of opportunity here and you would be remiss not to look at them.
Commodities are another hot spot in the macro arsenal of asset classes. While the term is broad the trading is even broader as you can trade energy, agricultural products, livestock, metals, and even precious metals. If you can pick it up or eat it you can trade it. This is a good thing as it gives us more potential trade opportunities.
Finally we get to currencies. This is actually the largest asset class out there and gives some of the best trading opportunities. If you have an opinion on any country you can buy or short the currency and try and make money.
Finally we have venture capital, private equity, real estate, and collectibles. These assets are tradeable with one major caveat, and that is that they are not very liquid. Whereas you can unwind a billion dollar currency trade in minutes, it can take days and weeks to get out of real estate and private equity investments. - 23199
About the Author:
The Macro Trader does research for a newsletter that gives the Global Macro Trader actionable trading ideas each week. Mean Reversion 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 @ 1:58 AM
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