Whenever the US stock market goes up, the dollar goes down (relative to the Euro).
Friday, 1 May 2009
I was interested to find these professors, Antonio Fatas and Ilian Mihov, views on the Global Economy in a blog called http://fatasmihov.blogspot.com/
The latest entry related to the correlation between the US stock market and the dollar. If you are interested, here is the link
It is interesting that according to Fatas, the correlation is not easy to explain with traditional macroeconomic models. He says “…to some this might not be a surprise given how bad some of our traditional macroeconomic models have helped us navigate through the current financial crisis!”
The point is that looking for signs that help decision making for world governments to help bring the world economy back on track is not easy. I suspect that over time, we may be able to look back and see signs or correlations or other factors that perhaps show a turning point, but at the time, these are very difficult to spot.
Relate this concept back to your wealth…whether its property, pensions, ISAs, etc…knowing when is the right time to reallocate by spotting what’s happening in the world is extraordinarily difficult. Yet most investors employ fund managers that attempt to do just that. If they get it right, it makes a significant difference to your return, but if they get it wrong, you suffer.
Rather than employ fund managers that add another level of risk that you cannot control or manage, there is enough empirical evidence that suggests adopting an investment philosophy that looks to capture market returns. Yes you have guessed, it’s what we do.
posted by Murray Round Wealth Management @ 11:07,
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Nicholas Round
Nic is the Managing Director of Murray Round Wealth Management Limited, who seeks to ensure the advice provided is truly independent. Based in Shropshire with clients local, national and worldwide, Nic has strived to find the best possible service for his clients needs, by researching and studying the market, trends and philosophies. Nic strongly believes Asset Class Management will bring his clients Financial Freedom, Independence and Happiness.
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