How To Use Financial Data To Invest Wisely

The following is a guest blog post:

Investing is not for the faint of heart. This is true for beginners, intermediate-level investors, and experts. Part of the problem with the financial markets is that they are unpredictable. Fortunately, the more you know, the luckier you get with investing. This is not to say that the pundits can’t get it wrong, because they do. However, armed with the right knowledge you can certainly make more winning trades than losing trades with your broker. 

According to esteemed investment consultant Montgomery H. Barkley, ‘Investing is not a willy-nilly activity like pinning a tail on a donkey at the local fair. It is part and parcel of a strategic decision-making process that encompasses extensive research, and analysis.’ Such sentiment can be a little disheartening to those without the requisite understanding of supply and demand, economic data analysis, technical and fundamental indicators. Fortunately, the factors that determine price movements in financial markets are not as complicated as institutional investors in ivory towers make them out to be.

Basic introduction to fiscal and monetary policy intervention in the economy

Financial data is pervasive. Anyone with a laptop, smart phone, or tablet can access the information at any time. The macroeconomic variables that shape financial markets are vested in two areas: fiscal policy and monetary policy. Fiscal policy determines how money is spent by the government. This includes investment spending and taxation. Investment spending injects cash into the economy and stimulates economic growth, while increased taxation removes cash from the economy and causes a contraction in economic growth. However, they are both part of the same cycle since the government needs the tax dollars to inject into the economy, unless it borrows the funds. Nonetheless, speculators use this type of fiscal data to formulate their analysis of stocks, currencies, commodities, and indices.

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Disclosure: Long GIS, VFC, HRL, GWW, CAH

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