Applied financial macroeconomics and investment strategy a practitioner’s guide to tactical asset allocation

Abstract

Professional investment strategists tend to come from a variety of backgrounds. Many started as equity analysts covering companies in a particular sector. Since investment strategy involves cross-disciplinary insights from finance, economics, and business, financial sector analysts have an especially good vantage point to become macro strategists as they are more tuned into the monetary policy, credit, and interest rate cycles given their outsized effects on the earnings of the companies they follow. Finance majors learn many of the basic principles that are useful for valuing assets, an important skill for investment strategists. Economists, on the other hand, usually have more relative strength in analyzing the business cycle and the macroeconomy, as well as monetary and fiscal policy, which have significant impacts on investment performance. Indeed, some Wall Street strategists, like myself, were initially professional economists, with an economic forecasting and monetary policy focus.