Sunday, September 25, 2016
Globalization, global history, and macro investing
Economic and financial globalization is not just about trade. It is about trade only to the extent that trade includes goods, services, capital, labor, information, and culture. Globalization concerns the positioning of the firm and the individual in the world and not just the positioning within the nation state or local economy. While globalization affects everyone, the focus is greater for the person who is more in touch with London than Cleveland, Paris over San Antonio, and Beijing over Jacksonville.
This deeper perception on globalization is more apparent with younger money mangers and with those educated at the better universities around the country and world because of a change in teaching focus in the liberal arts and especially history. The ascent of global history as a replacement to the history of the nation or western civilization has refocused thinking about a person’s place in the world. The redirection to global history has made students appreciate the parallel development and at times advanced developments of alternative regions and cultures.
Global macro investing is for the globalist investors who believe the connectiveness of the world is primal to all investing. This connectiveness is exploitable because everyone does not immediately perceive it. Closeness around the globe exists but the speed of adjustment in not always immediate. For example, the impact of policies by the Bank of Japan will take time to affect industrial production in the US. Credit defaults in China will spillover to the rest of the world but impact in complex. The discounting of globe events by non-globalists is slow. This leads to opportunities.
Being prepared to accept cultural differences makes cross-border thinking and analysis easier. Global history and the broader teaching of cultures and philosophies have reduced any psychological home biases. Unified frameworks using the tools of finance are employed without any specific anxiety about global distances or culture.