Now, what about managing money,
and investment portfolios that contain not just stocks,
and bonds, but perhaps assets like real estate.
Here, a solid foundation in
macroeconomic principles can be equally important and profitable.
One very key point here,
is that both the bond and stock markets are what economists call,
leading indicators of the economy and related movements in the business cycle.
For example, if an upward trending bullish stock market reaches a turning point,
and begins to move into a sustained and bearish downward trend,
that is a strong signal that a recession may be coming.
In a similar fashion,
if the bond market yield curve,
which depicts the relationship between short and long term government bond yields,
begins to flatten or even to invert,
that can likewise signal a possible recession ahead.
Now, here's another key point.
If you as a money manager,
or investment advisor clearly understand
the complex relationships that exist between the macro economy,
and the prices of assets like stocks,
bonds, and real estate,
and if you were also able to forecast the economy,
you will be able to make much better decisions about
the investment portfolios you construct for your clients.
For example, if your macroeconomic forecast predicts recession,
that may be a good time to move some of
your investment funds out of the stock market into cash,
or into the bond market,
which tends to move in the opposite direction of the stock market.
Of course, that kind of market timing is not what they
teach in traditional finance courses in business schools,
where you are more often taught to buy in whole.
However, modern money managers clearly understand
the importance both of improved market timing,
as well as the even more critical hedging and leveraging a business cycle risk.
So here is my bottom line as we start out this journey together.
This course in macroeconomics should be of immense value
to you whether your career path involves managing companies,
managing investment portfolios, or simply managing
your own personal finances.
The topics we will cover in this course,
will necessarily include the standard list of
problems analyzed in every macroeconomics principles course.
For example, inflation, unemployment,
economic growth, budget deficits, and trade imbalances.
Of course, we will also look very carefully at what is
in the toolbox of macro economists to fix such problems.
With such tools ranging from monetary, fiscal,
and tax policies to trade and regulatory reform.
But in this course you will also learn the basics of economic forecasting,
along with a set of business cycle management strategies,
that may be applied by business executives,
and money managers over the course of
the ups and downs of the business cycle and economy.
And that's why this course is so appropriate for students interested in
actually using economics in the real world of business and finance.
Hey, what a concept.
An education you can immediately put to work,
and one that might even help you find your first or next job.
So good luck in this endeavor.
I'm sure, that if you put in the time and effort to master the material in this course,
you will be paid back many times over on your investment.