Product Description

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.

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Product Details

• Amazon Sales Rank: #1090127 in Books
• Published on: 2001-09-01
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 269 pages

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.

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Customer Reviews

Helpful Ways to Avoid Worthless Investment Risks
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!

Essential in helping you 'think-outside-the-box' in markets.
Despite the strange title, this book is jam-packed with common sense with the goal of making the reader a fleet-footed trader/investor basing their strategy on macroeconomic theories and events.

The book is designed to show the influence of macroeconomic events on financial markets and then the knock-on effects on differing sectors and stocks. The first part goes through the various economics schools of thought and how they have moved markets before. Much discussion is then given to the influence of economic indicators, business/stock market cycles, and of course, Fed Chief Alan Greenspan.

The second half of the book then looks at different sectors and how they perform during the (repeated and predictable) peaks and troughs of the business and stock market cycles.

The main gist of the book is to make the reader think through what historically happens in varying situations and the impacts on the markets. After a while, the reader should be able to think through knock-on effects on the markets and act accordingly.

Unless your name is Soros or Buffett, this book could prove to a be a goldmine for your bank balance...it is a bargain. I fully recommend budding traders and investors buy, steal or borrow it.

Essential if you want to understand stock market movements.
‘When it rains in Brazil …’ puts stock markets in a macro-economic perspective, explaining the correlation of numerous macro-economic events such as inflation, fed decisions on interest rates, budget deficit etc. and stock market behavior. This might sound dry reading, but plenty examples and witty writing easily help the reader through the theory part on macro-economics before the rubber hits the road in the second part of the book. It helps you to understand and anticipate movements in the stock market and even sectors of the stock market by looking at a bigger picture, and it outlines a variety of strategies to react to macro-events that trigger those movements. With an excellent repertoire of resources at the end of the book, ‘When it rains in Brazil …’ is essential reading for trades and investors alike, basically for whoever is involved or plans to get involved in the stock market.