I bought How the Economy Works: An Investor’s Guide to Tracking the Economy (How the Economy Works) by Edmund Mennis as a reference work for my weekly series on economic indicators at Financial Options. Mennis starts off with an explanation of why investors need to track the economy in the first place that hits the two most important things the economy affects from an investor’s point of view - interest rates and corporate profits. Then he explains what exactly is worth tracking starting with “What is GDP anyway?”
Mennis devotes the next chapter to what I’d argue is the single most important economic factor moving markets - inflation and the fear that inflation will force moves by the Federal Reserve. He returns to that theme in Chapter 8 “Interest Rates and Monetary Policy.” The book has plenty of space devoted to explaining the interpretation of other important indicators: consumer sentiment, business activity, government action, corporate profits and the global marketplace. Finally the last quarter of the book offers advice for finding reliable economic information online advice for individual investors. Throughout, the explanations are sound, with proper attention paid to how the indicators affect markets both directly and indirectly.
Post a Comment