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. 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. 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 contributorto realmoney.com. INVESTING FROM THE TOP DOWN A Macro Approach to Capital Markets By ANTHONY CRESCENZI The McGraw-Hill Companies, Inc. Copyright © 2009 McGraw-Hill, Inc. All right reserved. ISBN: 978-0-07-154384-2 Contents Chapter One Top-Down Investing Has Arrived The world has become more complicated than it used to be, and investing has certainly become more complicated too. Luckily, there has evolved a way to empower investors and make investing simpler, a way of investing that has been around for ages but which only recently has reached critical mass and made it possible for everyone to use. Such is the promise of top-down investing, an investing concept that relies upon indicators which carry implications that are crystal clear and highly dependable thus making it relatively easy to devise investment strategies, especially for those with very little understanding of balance sheets or the world of finance in general. It is an investment approach that also fits perfectly with the evolution of our society, where attention spans for just about everything from television to newspapers and board games have shrunk. It is thematic investing, where an investor buys an idea first and then buys the stocks, bonds, currencies, real estate assets, and other forms of investment that fit with the idea. Top-down investing is an investment approach that has a multitude of advantages over other styles of investing, including its formidable counterpart, bottom-up investing, which relies mostly upon value investing, an investment approach that begins with scrutiny of the asset being bought. For example, in the case of corporate equities, a bottom-up investor would start with the idea that company XYZ might prosper enough to justify buying shares in the company which appear to hold value relative to the company's prospects. From there, the investor would analyze the company from the "bottom up," looking particularly at the company's balance sheet, its cash flow projections, and so forth, and do so in the context of the share price to decide whether the shares are worth investing in. Yes, this takes a lot of work, and if you do the work, you probably will choose a fairly good number of investments that work. Given the rewards, it seems we should all do the work to ensure that we are making the best possible investment decisions. The problem with bottom-up investing, however, is that investors don't always have the tools to take on such a task nor do they have the time. How ma