Investing From the Top Down: A Macro Approach to Capital Markets (Hardcover)

by Anthony Crescenzi (Author)
Key Phrases: thematic trading, thematic investing, automobile production schedules, Top Down, Federal Reserve, United States (more...)

Editorial Reviews

Product Description

In Investing from the Top Down, Anthony Crescenzi, esteemed financial author and chief bond strategist for Miller Tabak & Co., explains how to develop new, highly effective investment strategies by taking a macro view of the factors shaping industries and markets. Emphasizing the importance of economic and market cycles (as opposed to a bottom-up approach, which places valuation ahead of the big picture) top-down investing is better suited for today's global economy and will likely become the dominant strategy in the future.

Crescenzi provides more than fifty tools for analyzing domestic and international trends and indicators, such as GDP growth rates, inflation, interest and exchange rates, and energy prices. He then explains how to narrow your search down to region, total sales, price levels, competition, and entry/exit from market to make astute buying and selling decisions. Crescenzi explains why “thematic” investing is the ideal approach for:

• Taking full advantage of exchange traded funds (ETFs)
• Using the policies of central banks to steer your investments
• Designing diversification best suited for the long term
• Using sector selection to insulate your portfolio from risk
• Maximizing profits when market sentiment spikes or plummets

Investing from the Top Down covers every major financial instrument and investment choice, from bonds, treasuries, and currencies to real estate, private equity, and emerging markets. Crescenzi concludes with an extensive list of market indicators, providing specific advice on how to exploit them using a top-down investment strategy.

Investing from the Top Down provides everything you'll need to develop a sound strategy rather than making isolated choices. Comprehensive and forward-thinking, it will place you ahead of the game today and take you well into the 21st Century.

About the Author

Anthony Crescenzi, chief bond strategist at Miller Tabak & Co., is the author of The Strategic Bond Investor and Stigum's Money Market, 4th Edition. He frequently appears on business and finance programs, including NBC's “Wall Street Journal Report,” CNBC, and Bloomberg. He is a contributor to realmoney.com.

Product Details

• Hardcover: 304 pages
• Publisher: McGraw-Hill; 1 edition (September 12, 2008)
• Language: English
• ISBN-10: 0071543848
• ISBN-13: 978-0071543842
• Product Dimensions: 9.1 x 6.2 x 1.1 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 3.5 out of 5 stars See all reviews (4 customer reviews)
• Amazon.com Sales Rank: #82,898 in Books (See Bestsellers in Books)

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Customer Reviews

Most Helpful Customer Reviews

12 of 12 people found the following review helpful:

5.0 out of 5 stars Finally a Book on Top-Down Investing!, December 29, 2008

By	Ozan S "engineer_c" (USA) - See all my reviews

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.

4 of 4 people found the following review helpful:

2.0 out of 5 stars Dont tell me, Show ME!!, February 20, 2009

By	Avi Cohen "FESX Trader" (Toronto) - See all my reviews (REAL NAME)

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.

6 of 7 people found the following review helpful:

2.0 out of 5 stars Defnitely NOT a book for professionals, January 11, 2009

By	Yin Luo (New York, US) - See all my reviews (REAL NAME)

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.