If It's Raining in Brazil, Buy Starbucks : The Investor's Guide to Profiting from News and Other Market-Moving Events [Hardcover]

Peter Navarro (Author)

Book Description

Publication Date: August 20, 2001

From mid-March to mid-May of 2000 the NADSAQ suffered a 40 percent drop from it's all-time high of 5132. This tumble was caused by a combination of forces: the failure of Microsoft and the Justice department to resolve their anti-trust dispute, an unexpected jump in the CPI, and Federal Reserve Chairman Alan Greenspan's increase in interest rates. The drop eliminated millions of dollars of wealth and left thousands of investors wiped out. The lesson was clear: any trader or investor who ignores the power macroeconomic forces have over the world's financial markets will lose more than they should. This text introduces the trader and investor to the power of large, global economic forces and explains in detail how these forces affect the market. It provides a big picture overview of the global fundamentals that move the market as well as indivdual stocks, clearly showing the links between major economic events and stock market movement. The author looks at how and why these sectors respond differently to economic forces. The book applies macroeconmic theory to the practical world of stock trading, using real-life examples to illustrate key points and simulation and case studies to show profitable trading based on macroeconomic news. The author focuses on specific macroeconomic forces, which economic indicators are important to follow, and which sectors of the economy react to different indicators, providing traders and investors with clear trading signals. Topics include: trading in inflationary or recessionary environments, how fiscal and monetary policy affect the market, and technolgical change and how to take advantage of it.

Editorial Reviews

From the Back Cover

How to Understand the Forces that Shape Today's Financial Markets­­and Act on Rising or Falling Prices Before They Hit

Sharp moves in stock prices­­whether up or down­­tend to give ample warning signs before they arrive. If It's Raining in Brazil, Buy Starbucks reveals the signals that professional investors look for, then explains how to read those signals and discern their true meanings to either profit from sudden upsurges in prices or protect yourself against unnecessary losses. The book avoids esoteric mathematical formulas and programs to concentrate on real-world techniques and strategies. It will show you how to work with global economic forces­­instead of against them­­to build a strong, adaptive, and intelligent portfolio.

Praise for If It's Raining In Brazil, Buy Starbucks...:

"In targeting the market events that cannot be ignored, If It's Raining In Brazil, Buy Starbucks does a great job separating the thought process of the amateur investor from the professional. Navarro's book gives the reader a valuable insight into market psychology."­­David S. Nassar, CEO, Market Wise Securities, Inc., Author, How to Get Started In Electronic Day Trading and Rules of the Trade

"Witty, fun, and very informative...Peter Navarro has come as close as you can to creating the ultimate roadmap to understanding how news and economic events affect markets. I wish this book had been available when I started my trading career."­­Oliver L. Velez, CEO, Pristine Capital Holdings, Inc.

"Any trader or investor that ignores the power of macroeconomics over the world's financial markets will, sooner or later, lose more than they should­­and perhaps more than they have. The purpose of this book is to help you become a "macrowave investor." This is an individual who not only can learn to jump out of the way when the macroeconomic freight train is coming but who can also jump on that train and ride it for a profit­­whichever direction it is going."­­From the Prologue

Today's global markets are part of a much larger world, one dominated by fluid government policies, volatile political unrest, and other interacting forces. If It's Raining in Brazil, Buy Starbucks quantifies how these far-reaching factors affect stock prices, and how you can trade more effectively by understanding the direct and indirect links between them.

Using in-depth analysis, case studies, and real-life examples, Harvard-trained economist and professor Peter Navarro provides a big picture overview of the global, macroeconomic fundamentals that move the market. At the same time, he clearly shows the links between major economic events and the movements of individual stocks, quantifying­­in terms the average investor can understand and use­­how these forces impact specific sectors of the stock market.

The resulting book is valuable for every individual­­from swing trader to buy-and-hold investor­­who needs to know when and where to get into the market, when and where to avoid the market, and how to hedge investments to guard against sudden and dramatic price upheavals. Look here to learn more about:

• Event-based strategies that consistently identify profitable trading opportunities
• Which economic indicators consistently provide the most predictive power
• Strategies for profitable trading during periods of inflation and recession

Today's global stock market doesn't work in a vacuum. As an investor, you have no control over the forces impacting individual stock prices. You can only control your investment decisions as they relate to those forces. If It's Raining in Brazil, Buy Starbucks will help you track economic events and understand which events provide the greatest opportunities or risks. In doing so, it will also help you appropriately structure your portfolio and trading activities to successfully apply "macrotrading" principles­­regardless of the market's overall direction.

About the Author

Peter Navarro is a professor of business and economics at the University of California-Irvine. He received his Ph.D. in economics from Harvard University and has written several well-received college textbooks. Navarro has written articles for Harvard Business Review, Business Week, Wall Street Journal, New York Times, Los Angeles Times, and Washington Post. He has also created an interactive, multimedia CD-ROM for McGraw-Hill Higher Education called The Power of Macroeconomics that supports several McGraw-Hill Higher Education economics college textbooks. The author has also created a powerful website (www.powerofeconomics.com; see backup material) to support the CD-ROM.

Product Details

• Hardcover: 269 pages
• Publisher: Mcgraw-Hill; 1st edition (August 20, 2001)
• Language: English
• ISBN-10: 0071373691
• ISBN-13: 978-0071373692
• Product Dimensions: 9.3 x 6.2 x 1 inches
• Shipping Weight: 1.2 pounds
• Average Customer Review: 4.0 out of 5 stars  See all reviews (20 customer reviews)
• Amazon Best Sellers Rank: #613,630 in Books (See Top 100 in Books)

More About the Author

Peter Navarro is a business professor at the University of California, Irvine. His latest book is "The Well-Timed Strategy: Managing the Business Cycle for Competitive Advantage."

He is author of the bestselling investment book If It's Raining in Brazil, Buy Starbucks" and the bestselling audio lecture course "Big Picture Investing: How, When, and Why the Stock Market Moves." His weekly newsletter on the economy and stock market is distributed widely and is available to the public at www.peternavarro.com .

A widely sought-after and gifted public speaker, Navarro has appeared frequently on Bloomberg TV, CNN, CNBC, NPR, and all three major network news shows. Navarro's articles have appeared in a wide range of leading publications, including Barrons, Business Week, Harvard Business Review, The New York Times, The Wall Street Journal, and Sloan Management Review.

Professor Navarro holds a B.A. from Tufts University and a Ph.D. in economics from Harvard.

Customer Reviews

Most Helpful Customer Reviews

7 of 8 people found the following review helpful:

5.0 out of 5 stars Profit from Interpretations of economic report and news, September 5, 2001

By A Customer

This review is from: If It's Raining in Brazil, Buy Starbucks : The Investor's Guide to Profiting from News and Other Market-Moving Events (Hardcover)

This is the best book I've ever read on the topic of interpretations on macro economic factors that drive the market. Many books and textbooks are cut and dry, and in the end they are theories. An example would be: an economic report may come out, but the market is responding in the exact opposite way based on standard economic theory, however the understanding of why the market is reacting in that way requires the correct interpretation based on economic(business) cycles and such. The theories may be correct, however it also depends on other factors as well. The author emphasizes the markets as a chess board rather than a simple checkboard. I for one agree.

9 of 11 people found the following review helpful:

4.0 out of 5 stars Helpful Ways to Avoid Worthless Investment Risks, October 29, 2001

By 

Donald Mitchell "Jesus Loves You!" (Thanks for Providing My Reviews over 109,000 Helpful Votes Globally) - See all my reviews
(VINE VOICE)    (HALL OF FAME REVIEWER)    (TOP 100 REVIEWER)   

This review is from: If It's Raining in Brazil, Buy Starbucks : The Investor's Guide to Profiting from News and Other Market-Moving Events (Hardcover)

I found this book to be very impressive in articulating sources of investment risk, and pointing out how investors using many different kinds of investing approaches can eliminate many of these risks. Whether you are a day trader, or a buy-and-hold type, you will find a least some valuable ideas in this book that will be new to you.

For many new investors, the most useful part of the book will probably be the description of when various industry sectors tend to do well, relative to the economic and stock market cycles.

For experienced investors, insights will probably come from getting some new ideas about managing event risk, being flexible about what financial instruments are bought, and doing pre and post analyses of trades to learn from your decisions. If you get to a section where you are familiar with the issues, feel free to skim forward until you find something that is a new idea for you. Much of the trading information will be old hat to you.

Many investors are unsure what to do with all of that new data that comes out about the economy and specific companies. This book is the best I have seen for helping you connect each item to its potential investment implications. Usually, these implications are at least somewhat indirect. For example, if a company makes a bid for another company, you should consider buying stocks in companies that may be acquired in the future as a response to the first bid.

The book's content covers first "macrowave" risks from inflation, a weak economy, changing interest rates, shifts in productivity, changing budget deficits, the trade balance, government regulation, technology changes, and acts of God (from storms to war to earthquakes). You will also learn how different government theories of economics can affect your investments.

The book's key principles are that you avoid gambling when you are looking for a speculation (take a chance when the odds are in your favor); diversify away from market, sector, and company risk; follow trends regardless of direction, expand beyond stock investing, never fight the trend, match news to economic and sector sensitivities, and look into indirect effects that others may ignore. To do this, you are given directions for how to think about sector rotation, and how to protect your capital.

Each concept is developed with at least one example drawn from actual news stories. Some of these will seem like "no brainers" like buying Starbucks if rain in Brazil breaks the drought that's harming the coffee crop there and has been forcing up coffee prices. Many of the other examples are a little more imaginative and interesting.

Each investor should also remember that almost no one beats the market averages over ten years or more. For the average individual investor, inexpensive indexed mutual funds are the right answer. To make that point more relevant, the professional investors who already know almost everything in this book seldom beat these indexed funds either over long time periods.

Make any attempts to beat the market that you pursue as inexpensive as possible!

3 of 3 people found the following review helpful:

5.0 out of 5 stars Ivory Tower? Hardly..., December 17, 2001

By A Customer

This review is from: If It's Raining in Brazil, Buy Starbucks : The Investor's Guide to Profiting from News and Other Market-Moving Events (Hardcover)

The one bad review is clearly sour grapes. Anybody who has worked with Peter, such as taking one of his classes at U.C. Irvine, or even just met him, knows that he's one of the least "Ivory Tower" academics around. In fact, he's one of the few that actually gets involved, and tries to put in to practice what he researches.
That said, the book does offer a broader perspective on how news will move markets, and teaches "chess" strategy as opposed to "checkers". Anyone who is interested in avoiding being blind-sided by world events effects on markets should read this book. It will teach them how to think about these events in a new way.