Investor's Passport to Hedge Fund Profits: Unique Investment Strategies for Today's Global Capital Markets

CHAPTER 2

Accurately Reading the World’s Economies An Intermarket Primer

At any given point in time, money flows to some pocket in the world. When the global economy went into recession and equities subsequently fell into a bear market from 2000 to 2003, money poured out of most equity markets around the world. However, that money did not disappear, nor did investors completely detach and move their money out of the capital markets as a whole. Savvy investors moved their money into countries like China, whose stock market was blossoming into a raging bull market. Most investors did not know anything about the Chinese market until years later, when all the newspapers were raving about the bull market. The point to take from this is that if you are able to follow the intermediate- to long-term flows of capital from market to market, you will remain ahead of the curve and enjoy exceptional returns. The point of this chapter is not to necessarily tell you in which country to invest. It is, however, meant to serve as a tool to tell you which areas of the global market you should be targeting. For example, if the expectation is for a global economic slowdown and lower commodity prices, you will come to understand that the best place to invest is within the realm of fixed-income vehicles. Armed with this information, you can search the globe for the best yields and for the country from which they come (we give you that tool in a later chapter). This is a chapter that, although it appears ...