One of the great intellectual feasts I attend each year is the annual Policy Conference of the National Association of Business Economists in Washington, and we leave tomorrow. Our speakers include Alan Greenspan, Alice Rivlin, Larry Summers, and Jean-Claude Trichet. I'm always excited by this conference.
So, it is with some irony that I'm currently reading new research suggesting everybody should fire their economist. This research studied the relationship between investment returns and country-wide predictions made by economists. They looked at 85 countries between 1972 and 2013. In conclusion, when economists tell you that a particular country is in trouble, then you should buy stock of companies in that country. (I can argue with this conclusion, as the data certainly does not "fit well.")
Of course, this research ignores the job of the investment strategist, who translates economic analysis into usable investment decisions. In fact, it was silent on the subject, suggesting a lack of information on the part of the researchers. Still, it helps set the mood for our conference. There are few pursuits as humbling as economics, and this latest research is a reminder of that as we enter the conference.
Stay tuned for next week's blogs . . .
So, it is with some irony that I'm currently reading new research suggesting everybody should fire their economist. This research studied the relationship between investment returns and country-wide predictions made by economists. They looked at 85 countries between 1972 and 2013. In conclusion, when economists tell you that a particular country is in trouble, then you should buy stock of companies in that country. (I can argue with this conclusion, as the data certainly does not "fit well.")
Of course, this research ignores the job of the investment strategist, who translates economic analysis into usable investment decisions. In fact, it was silent on the subject, suggesting a lack of information on the part of the researchers. Still, it helps set the mood for our conference. There are few pursuits as humbling as economics, and this latest research is a reminder of that as we enter the conference.
Stay tuned for next week's blogs . . .
