In this chapter I reflect on the role of the economist/strategist in the business of managing wealth. It is a role I have played since my first involvement with the financial markets in the early nineteen-nineties.
I share the ideas about financial markets and their relationship to the economy that have informed my work as an investment strategist and economist in the financial markets. I say a little about my personal involvement in the financial markets.
I explain the importance of a well-considered investment strategy, for not only the wealth owner or their agents, the portfolio managers, but for the greater good.
These thoughts are followed by a case study of how I go about my work reading the financial markets that I hope will be of interest and helpful to those with a close interest in financial markets. The analysis offered is an example of pattern recognition that analysts and indeed all businesses rely upon to improve their predictions. This recognition has become so much easier over my years with the ready availability of low-cost computing power, most helpful software, and abundant data, easily downloaded. Exhausting the data, testing a theory, looking for evidence to support a theory, becomes a matter of minutes rather than the years it took when I first took an interest in financial markets. Theory and observation run together, observations lead to theory and theory is tested by observation. My attempts to understand and explain the links between the financial markets and the economy and the economy and financial markets remains a work in progress that I hope to continue for as long as it makes sense for me to do so and worthwhile for those who engage with me.
Read the full chapter here: Chapter 10 – The theory and practice of investment strategy