Since we’re called Thrifty Investing, we’re going to talk about something within the investing and financial world that most people don’t understand, The Economy.
What do we really know about the economy? Obviously if you are an economist, you know a bit more about this subject, but what about the rest of us? We watch the news as they talk about the economy, but do you understand what they’re talking about?
This is why I picked up a few books on the economy.
2. Cartoon Introduction to Economics, Volume I: Microeconomics
3. The Cartoon Introduction to Economics, Volume II: Macroeconomics
When studying the economy, you have Microeconomists that study human behavior and how it relates to a bigger picture, then you have Macroeconomists who study the bigger picture.
I enjoyed learning more about Macroeconomy, as that seemed to deal more of what is being talked about on TV and the news. GDP, CPI Data, Unemployment Rates, Inflation, interest rates. These figures or numbers that come out once a month or more give a cause and effect to the market.
To understand how they all correlate, you need to understand what each of these items means, how does it apply to the market, and when does that data release? Although I have read a few books and learned a few items, there is still so much to learn. I am still trying to sort out what is good data, what is bad, and sometimes good data can come in at the wrong time, same with bad data can come in at a good time. All of these items reflect how the market will react.
When we have these numbers release, it causes hedge funds and investment funds to look at the market with either a sell or buy signal. Is it a bear market or a bull market? Well, when the data agrees with the economists and hedge funds of the world, they make those decisions which help push the market into the red or green. I know I am generalizing here, but unless you read, learn, and study the economy, who really knows. I think that is also my point, do you understand the economy?
What do you think is something most people don’t understand?
Thrifty Investing 