17 of 17 people found the following review helpful:
2.0 out of 5 stars
Dont tell me, Show ME!!, February 20, 2009
This review is from: Investing From the Top Down: A Macro Approach to Capital Markets (Hardcover)
I was more than a little disappointed with this book as I thought it might actually describe some strategies the author uses to invest from the top down, or even a process. Instead half the book is filled with reasons why you should invest from the top down. Wow!!! Great job Anthony, but dont you think the purchasers of the book are already interested in top-down investing? Inside the house of money, The Alchemy of Finance, Mr Market Miscalculates are all better choices.
The only good thing about the book is that is stresses you should do your own research (agreed) and it tells you some websites where to do so (BIS, Fed in Print, World Bank, etc).
Nonetheless, if you read finance/investing/trading books in the hope of getting just 1 or 2 good ideas, this book will probably have something for you. Just don't expect anything earth-shattering.
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21 of 22 people found the following review helpful:
5.0 out of 5 stars
Finally a Book on Top-Down Investing!, December 29, 2008
This review is from: Investing From the Top Down: A Macro Approach to Capital Markets (Hardcover)
After the credit crisis it became obvious that one cannot base their investment decisions only on the domestic or company specific factors. What does an investor in India have to do with the subprime mortgages in the USA? nothing? Well he lost about 70 percent value of his investments due to the crisis.
This book came right at the time when I was thinking a top-down perspective was in order for making investment decisions as bottom-up approach failed and the markets became more integrated than ever before.
Here the book goes: First few chapters explain why top-down investing is a must today, the changing world, advantages of top-down, so on. After that one of my favorite chapters come. Chapter 4- Thematic Trading and Investing, where the author shows how themes (major ideas, trends) may be used in top-down investing, gives a few examples and guidance. Another big chapter is Chapter 6- Central Banking Is a Top-Down Affair, where the author explains the transmission effects of Fed policies on the financial markets, (stock prices, credit spreads, dollar, so on), Fed's impact on stock sectors, and commodity prices.
Here is an excerpt :" Keep in mind that, when credit spreads widen, it is important to determine whether the widening is because of a liquidly shock, as was case in 1998 and 2007-2008 when investors... or because of credit-quality shock, as was the case in 2001. The distinction is important because..."
I also like chapter 7- Filling the Gaps on Value Investing (for those who want to stick with bottom-up) and Chapter 9- Do the Math, where the author gives some examples of how to do calculations to see if market has valued something wrong or if an investing opportunity exists.
At the end of every chapter, the author summarizes key points and lists the key indicators (the "golden compasses") mentioned in the chapter.
Finally, the 60-page chapter, chapter 14- The Top 40 Top-Down Indicators goes through the 40 indicators selected by the author. For each indicator "its power", "where to find it", "the view from the top down" and "how to nail it" is briefly explained.
Here is a few things I didn't like: 1- The author consistently refers to financial statements (whether its balance sheet, income statement or statement of cash flows) as "balance sheets", which is a little annoying. 2- Occasionally after giving some information about the subject, the author doesn't mention anything as to its application and leaves some question marks. One example to this is on page 205, in a chapter about the market sentiment. The author mentions "surveys of aggregate duration levels" as a way to track sentiment in the treasury market. "Aggregate duration surveys... capture the average duration level among the portfolio managers surveyed. .. look for the degree to which fixed income managers are long or short relative to the benchmark index. For example a reading of 98 percent would indicate that on average portfolios had duration levels that were 98 percent of the benchmark indexes.." And? How do we make use of this information? Since the portfolio managers created a lower duration they expect interest rates going up? If so should we expect the same? How should we interpret this and act? These questions are not addressed. But again, in general explanations suffice.
To wrap it up, the book is full of useful information and some sections are well worth reading twice. The book is similar to Ken Fisher's the Only 3 Questions.. But the author does not try to push his opinions into your head like Ken and gives more macroeconomic information that would be useful in investing. Highly recommended to those who are interested in the title.
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14 of 16 people found the following review helpful:
2.0 out of 5 stars
Defnitely NOT a book for professionals, January 11, 2009
This review is from: Investing From the Top Down: A Macro Approach to Capital Markets (Hardcover)
I am disappointed after reading this book. It's definitely not a book for investment professionals. There is very little technical or in-depth discussion of any topic in particular. For a book about economics and top-down analysis, I can't seem to find a single formula in it. Overall, a very superficial book with overly optimistic claims all over it.
The author tried really hard to convince the readers that top-down investing is much better than bottom-up, while generally we'd like to think they are complementary.
Another key point the author is trying to make is that if you are not well educated enough to perform financial statement analysis or have no time to do the detailed work, then top-down analysis is the way to go. Top-down analysis isn't any easier than bottom-up research. Both requires years of training, thorough analysis, and more important, nothing can guarantee investment success - luck is just as important as skill (if not more important) in investing.
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