Book Review: Big Picture Investing

Big Picture Investing, When The Market Moves Will You Be Ready by Professor Peter Navarro is a course on stock market investing. The course comes as an audio book with an accompanying 90 page course guide providing all relevant diagrams and data.

Big Picture Investing

Have you ever wanted to understand the stock market? From time to time, I have. This historically has amounted to turning on Bloomberg TV, being barraged with stats, figures and jargon for an hour then deciding to come back later to try again.  Not anymore. This 8-9 hour audio course takes most of the mystery out of what is being said on Bloomberg TV and any other business channel for that matter.

Over the past couple of decades, I have invested in the occasional stock. In the late 1990s, this was directed by investing approaches such as those promoted by The Motley Fool.  Unfortunately, while some trades were successful most didn’t really provide the gains I was hoping for. The Fool approach is primarily based on “fundamental analysis” of individual stocks, in the hope that the investor find a stock which is currently undervalued. What this doesn’t take into account is the big picture, i.e. the macroeconomic factors that effect stock prices. This is a major short fall in my opinion, as it should be common sense that even a strong company will struggle to gain in value in an overall weak market.

Navarro’s Big Picture Investing explains that there are actually three levels of significance we should be examining when investing, these being:

  • The Macroeconomic Environment – National and World.
  • Sector Trends – How sectors react at different phases in the business and stock market cycle.
  • Individual Companies – and their relative strength in their sector.

Ever wanted to know how inflation, interest rates, currency exchange rates, bond markets and major world events effect the market? listen to this course. Want to know which sectors do well in the early expansion phase of recovery? listen to this course. Need to understand how the top Wall St investors pick stocks? listen to the course.

I really can’t say enough positive things about the content. The content is well structured, very comprehensive and has been a real eye-opener. With a valuable nugget of knowledge delivered every couple of seconds, my rewind button has never seen so much action. I’ve actually listened to the course multiple times now, repeating various lectures over and over.  A colleague of mine, who is also enjoying the course, joked this week that given the opportunity.. we would both happily follow Professor Navarro around with notepads like groupies. He’s not wrong. I fully intend to purchase some of his other titles like “If It’s Raining in Brazil, Buy Starbucks”.

To balance out those positive comments, I should acknowledge that the course was created in 2004 (pre-2008 financial crisis) This means that although historically markets tend to follow cyclical behaviour some of the content is no longer relevant. For example, the US Uptick rule on shorting stocks was abolished in 2007.  It’s also solely US focused, so some of the cited resources simply aren’t available for UK or European Markets, or they take some digging out. Add to this the fact that ETFs (Exchange Traded Funds) for trading at the sector level are sadly lacking in the UK and it will require more of a stock focus to implement this strategy for UK investors. In the last decade globalization has really evolved and international markets seem much more interconnected than they used to be. The course does examine import, export and trade deficits but there should perhaps be some more focus on that in today’s market.

I highly recommend this audio book to anyone who wants to understand macroeconomics and their impact on the stock markets. A definite listen for prospective MBAs, also for those who want to turn their attention to making money on the markets.

Introduction to Studying Economics at LSE

I have been researching some private investment strategies in recent days and have inevitably encountered a need to refresh my understanding of Economics. As part of this research I came across this video.  The video is the a London School of Economics (LSE) kick-off day back in 2011. It shows Professor Witztum giving an introduction to what the prospective students may have in store when they embark on learning economics at the institution.

It’s really very insightful, so I thought I would share. Something that stuck with me was the differences between “learning” and “training”, where by training you are really only repeating what someone else has already done and repeating their process. Learning can be defined as a much more philosophical experience. This guy is a very engaging speaker and worth listening to.

If you don’t want to watch the full video, you can skip the content after the first 30mins. The latter content is focused on course specifics. That is unless you actually want to know the course specifics.