Review of Investor's Guide to Economic Fundamentals (Hardcover)

This book is excellent, as it delivers exactly what its title suggests.The book is expensive, as it is priced as a textbook.However, after reading it I feel it provides an excellent value.And, I will keep it in my personal library of quantitative books. Although the book is short, it is so hard packed with information that it takes a while to digest.Confirming the intensity of the information conveyed Amazon stats discloses that its Fog Index is 14.7 (years of formal education suggested to understand the book) and its Flesch-Kincaid Index is 11.5 (corresponding to the reading grade level).Those metrics are relatively high.However, the book is very rewarding if you want to learn the subject and manage your own capital in a better informed manner.

The book is divided into two main sections.The first section comprised of 10 chapters makes for an excellent foundation in macroeconomics, international economics, monetary and fiscal policies.The author always makes the topic relevant from an investor's standpoint. Thus, he presents the material in a practical way.Some of the subsections are particularly interesting including explanation of the implication of different yield curve shapes, the sustainability of current account deficits and fiscal budget deficits, the differentiation between the cyclical and structural components of the U.S. budget deficit, the detailed analysis of various emerging markets crisis (Asia, Russia, Brazil, and Argentina) during the nineties.In each cases, the author demonstrates an outstanding knowledge of the historical events and the underlying economic factors.

The second section includes 7 chapters covering each a specific investment (stocks, bonds, real estate, etc...). He explains how an investment is valued, what are the main drivers affecting its value, and how economic indicators and factors affect the value and attractiveness of that given investment. The author does a very good job of disaggregating the different components of economic return associated with each investment.By reading this section, you will learn in great detail how to value stocks, bonds, real estate and other assets.

The author also wrote a short third section that serves as a summary, synthesis, and conclusion. Within this section, he compares how all the different asset classes respond to various economic events.He also builds a rational expectation of real returns for stocks, bonds, and real estate going forward.He also outlines the many different investment styles of the investment pros and the challenges that each investment style faces.Overall, I strongly recommend the book.



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