Macroeconomic Theory

Personal finance?

While ‘personal’ finance deals with your financial situation, you can hardly afford to look at your own small financial portfolio. You want to invest in the stock of a local financial institution, but you must know that the performance of national and international banks is going to have a major impact on the performance of the stock you own. This is a very simple example of why the macroeconomic theory is so critical to the success of all investors.

Understanding that the performance, behavior, and structure of all markets are interdependent will help you to get a fuller picture of what is happening with your investments, and why. This, of course, is a key to making savvy decisions.

Looking at the Big Picture

Finance, like art, often requires us to get very close to something in order to see the true detail and beauty of the piece. If you remain too close, however, you’re going to miss the big picture. With art, this means you’ll miss the breathtaking views of things like the Sistine Chapel. With finance, it means you’re going to miss exciting investment opportunities or fall victim to following the latest trends in the market (constantly leaving you a step behind).

Here at Orchard, we pride ourselves on balance. We’ll look up close at the markets, and then step back and view it from afar. In the macroeconomic theory section, you’ll benefit from our hard work and insight regarding markets on a national and international level. This includes things like:

Long Term Economic Development
“Where will you be in 5 Years?” We’ve all been asked this question, but that is just the start. What about where will you be in 10, 20, 50 years? Understanding the long-term economic development of both your personal portfolio and the markets as a whole will help you to set and achieve your goals.
Improved Performance in the Economy
Many people don’t realize that they can have an impact on the overall performance of the economy. Wise investing at every level helps to ensure the markets function properly. That means an informed investor can have a direct impact on improving the performance of the economy in general.
Correcting Key Macroeconomic Indexes
“Market corrections” always happen when things get out of whack. Taking a proactive approach to help correct key macroeconomic indexes can help place you ahead of the curve so you can benefit from these corrections rather than suffer through them.

While the macroeconomic theory may not seem ‘sexy’ at first, it is a critical component of all investing. We take these often overlooked concepts and make them interesting and even exciting to read about.

Last articles on Macroeconomic Theory

Scientific Trading: Physical Reality, Material Future
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Factor Models: Outmaneuver Risk
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Labor, Capital and Balance: How to Survive The Clash of The Titans
Based on Macroeconomics by Greg Mankiw Macroeconomics primarily concerns the study of growth while microeconomics focused more on equilibrium. When we speak of growth, we speak of available labor and capital to form a certain production function and the growth of this function. Population growth is a source of labor growth and so is capital growth that net exceeds the rate of depreciation. We generally model output as labor times...
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