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Lessons:   The Classical Approach     Economic Analysis     Economic Key Performance Indicators     
Name: Global Economy
Description: Economic analysis starts with the global economy.
Author: Chris Devlin
Global GDP pie chart by country
 
2010 Global GDP Forecast
 
 
 
President Barack Obama comments on Global Ecomomy - October 2009
 
 
 
China defies Global Economic Trend
 
 
 
Services, etc as % of GDP (world)
 
 
 
Google - PublicData - World Services
 
 
 
Google - PublicData - World Services % GDP with G8 countries
 
 
 
 
Hyperlinks to relevant information
 
2010 Global GDP Forecast
 
Step 1. Review the Economic Analysis   (Show detailed report)
 
1. Importance Very important   The health of the global economy is very important when considering your investments. The stronger the global economy, the more likely your investments will do well. All economies go through cycles, and understanding the cycle of the global economy is key. The global economy may be in a 12 year upsurge, or a 4 year decline. Knowing those cycles will help you make better investment decisions.
2. Wisdom Important   It is wise to always consider the health of the global economy, wherever it is in its economic cycle. It is difficult for an economy of any region or country to do well if the global economy is not doing well. Currently, the global economy is expanding at a rate that is favorable to investments.
3. Knowledge Important   If the global economy is growing more than 1.5% a year, that is a very good signal and a great opportunity to own stocks. If the global economy is growing between 0.5% and 1.5% a year, it is more prudent to hold more cash or bonds. If the global economy is growing less than 0.5% or is shrinking (negative growth), it is more prudent to have the majority of your holdings in cash or bonds.
4. Current Assessment Bad   The current global economy is in a protracted recession. The financial distress in the global economy is likely to be a drag on recovery. The global economy will likely improve from "bad" to "fair" in 2010. For that reason, since the overall economy is likely to get better, there is a significant opportunity for investments with a multi-year time horizon.
5. Future Assessment Fair   The large stimulus by the United States. China, and others, will spur demand and enable a recovery from the greatest recession since the 1930's. The future direction is "fair" and not "good" because of the overwhelming magnitude of the recovery, and the risk that a "double dip" recovery may occur. The investment opportunity in the future is positive, though.
 
 
Step 2. Consider the Future Assessment Probabilities, Reasons and Explanations
 
   Possible Outcome Probability Value Reasons and Explanations
1. Awesome   0% 5%+ awesome commentary
2. Good   10% 3%+ good commentary
3. Fair   70% 0%+ fair commentary
4. Bad   20% -3%+ bad commentary
5. Terrible   10% <-3% terrible commentary
 
 
Step 3. Consider the Key Performance Indicators

Key Performance Indicator Analysis Summary   
Key Performance Indicator Importance   Current Assessment   Future Assessment  
1. Gross Domestic Product (GDP)     Important   Fair   Good
2. Inflation Rate     Important   Good   Fair
3. Unemployment     Important   Fair   Fair
4. Interest Rates     Important   Fair   Good
5. Consumer Durable Goods     Important   Fair   Fair
6. Personal Income     Neutral   Fair   Bad
7. Saving and Investment     Not important   Terrible   Fair
8. Total Economy - Current Account     Insignificant   Fair   Fair
 
Do you agree with the analysis?
Should you continue to search for investments?
 
 
 
Step 4. Continue your search for investments by following one of the links below

Sub-Economy / Geography Analysis Summary   (Show assessment details)
Sub-Economy / Geography Importance   Current Assessment   Future Assessment  
1. North America Economy  ( follow this link for All assets)   Very important   Fair   Fair
2. South America Economy  ( follow this link for All assets)   Important   Fair   Awesome
3. Asian Economy  ( follow this link for All assets)   Very important   Awesome   Fair
4. African Economy     Neutral   Fair   Good
5. Australian Economy     Important   Good   Good
6. European Economy     Important   Good   Good
 


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