There are dozens of indicators that can help investors make the right call for their next position – but one of the often overlooked is a county’s GDP.
You’d assume this is a no-brainer, but it’s surprising just how easily camouflaged the things right in front of us can become. Before we get started, we’re going to get one thing out of the way: you won’t make millions reading this. Well, you might. But that all depends on how clever you are with your investing. In short, don’t come crying to us when you’ve cracked all the eggs you hoarded into one basket.
No, what follows won’t make you rich overnight, but it may give you a little bit of a confidence boost when you’re looking for the next profitable venture to entrust your spare funds to. If you’re getting ready to jump into torrential waters of stocks, bonds, and currencies, you’d best have the letters GDP stamped across your forehead.
Perhaps more of an indicator than all the others, a country’s GDP is a straight-forward, no-bullshit assessment of the land in question’s economic health. In the most distilled terms we can offer while still having something to dole out, a rising GDP reflects a healthy and growing economy – while a lowering GDP reflects a more stagnant and receding economy. This alone may not give you enough information to bet on your next winning horse, but it sure as hell can tell you if you’re heading into a bull or bear market.
GDP, like any other market indicator, will fluctuate between highs and lows for as long as there are humans around to sustain the exchange of purchasing and selling. Freaking out over a dip or a bump won’t do anyone any good, and if you feel like you’re the sort of person who’d react in that manner, may we consider another hobby more suited to your nerves: perhaps crocheting?
For all of you aspiring billionaires out there, however, screw the concept of GDP indicators into your head nice and tight and never forget it. “But!” We hear you ask, “what if we want to predict GDP?” Fret no more – we got you, boo. Although we’ll be the first tom claim that there is no sure-fire way to predict the economy, there are many points of data on which to hedge your bets. One among them is the ISM’s Report on Business.
The ISM’s Report on Business is a series of two monthly reports published every single month of the year by the Institute for Supply Management. The reports are based on national surveys taken by purchasing managers – they effectively track changes in both the non-manufacturing and manufacturing sectors. If you were looking for an early peak at US GDP – this is it. Both market-moving and easily accessible, the ISM has a highly reputable history within market research for its low lag time and accuracy when correlating to GDP predictions.
So remember, the next time that you see yachts and luxury cars in your eyes, take a moment to rip yourself back to reality and analyze some humbling and enlightening statistics before you take the plunge into torrid waters.