My upcoming book, Pragmatic Capitalism: What Every Investor Needs to Know About Money and Finance, has one overarching theme – the rise of the interconnected macro world. I argue that a failure to understand the macro will very likely reduce your ability to succeed in our rapidly changing macro world.
In essence, what we’re seeing is a boom in technological advancements (led primarily by the developed world) combined with a population and middle class wealth boom in the emerging world. The result is an incredible transformation that is creating a convergence between the developed and the emerging worlds as technology gives the emerging world greater access to higher living standards, knowledge, information, etc.
To understand why this trend is so important you have to understand the big picture. You have to understand the macro picture. We can’t afford to only think locally or domestically any more. We have to think globally. So I was super interested in this study by McKinsey which discusses this precise trend:
“But today, the movement of goods, services, finance, and people has reached previously unimagined levels. Global flows are creating new degrees of connectedness among economies—and playing an ever-larger role in determining the fate of nations, companies, and individuals; to be unconnected is to fall behind.”
This trend is only just gaining momentum. Those who can think in a macro sense and understand how to think in a global manner will be the next winners of the new macro world.
You can read the full study here.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.