Asset Classes for Global Macro Trading
Among the ten asset classes we have cash, equities, fixed income, commodities, currencies, real estate, private equity, venture capital, collectibles, and statistical arbitrage. Obviously not all of these are easily accessible by most retail investors but you can still get into five or more.
Cash is the first asset on the list. While technically a currency we look at it as more of a place of last resort. You earn a bit of interest on it but basically you only use it when you can find another place to put your money to work for a higher return.
Equities are the next asset class on the list. We include domestic, foreign, and even emerging market stocks in the same broad asset class category. Equities represent ownership in a company.
Fixed income, also known as bonds represent loans to a government or business. When you loan money you receive interest in exchange. Anyways most global macro traders trade US government, foreign government, corporate, and even low grade corporate bonds. They have different drivers so they provide more trading opportunities.
Commodities are up next. Commodities include things like base metals, precious metals, agricultural products, livestock, and the energy complex like natural gas and crude oil. Macro investors are willing to invest in anything from gold to lumber to even livestock if they can find a good risk to reward opportunity.
The largest asset class is that of currencies. Currencies have long been one of the primary trading assets for macro traders. If you have an opinion on one country versus another then you have a basis for a trade. If the reward outweighs the risk then you can have another asset class to trade.
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. - 23218
Cash is the first asset on the list. While technically a currency we look at it as more of a place of last resort. You earn a bit of interest on it but basically you only use it when you can find another place to put your money to work for a higher return.
Equities are the next asset class on the list. We include domestic, foreign, and even emerging market stocks in the same broad asset class category. Equities represent ownership in a company.
Fixed income, also known as bonds represent loans to a government or business. When you loan money you receive interest in exchange. Anyways most global macro traders trade US government, foreign government, corporate, and even low grade corporate bonds. They have different drivers so they provide more trading opportunities.
Commodities are up next. Commodities include things like base metals, precious metals, agricultural products, livestock, and the energy complex like natural gas and crude oil. Macro investors are willing to invest in anything from gold to lumber to even livestock if they can find a good risk to reward opportunity.
The largest asset class is that of currencies. Currencies have long been one of the primary trading assets for macro traders. If you have an opinion on one country versus another then you have a basis for a trade. If the reward outweighs the risk then you can have another asset class to trade.
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. - 23218
About the Author:
The Macro Trader helps investors find great Global Macro Investing opportunities. 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 @ 1:41 AM
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