Keep the economists off the trading desk: Up until 2008, Economists had no business anywhere near the trading desk

Tom McKay

Keep the economists off the trading desk: Up until 2008, Economists had no business anywhere near the trading desk. Their work was important as a framework toward understanding the interplay between the markets and the real world - but that was about it. Then post-crisis, some of these guys became rock stars, there were economists making equity market buy and sell calls in the media and there were even economics reporters grading the trade on TV. A study from the LSE concluded that choosing where to invest based on favourable economic factors is actually a recipe for underperformance. Take the records of 83 countries from 1972 to 2009 and rank them by GDP growth over the previous five years. Investing each year in the countries with the highest economic growth over the preceding five years earned an annual return of 18.4%, but investing in the lowest-growth countries returned 25.1%. (VIEW LINK)


Comments

Please sign in to comment on this wire.