Book to understand current economic climate

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NYCaviator
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Book to understand current economic climate

Post by NYCaviator »

I'm interested in reading more on economics. We are in an odd time where bonds are not behaving as expected (they fell with interest rates), stocks seem massively overvalued, and real estate is through the roof. I'd like to read more to understand why this is from a macro standpoint. Any good book suggestions would be appreciated!
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Re: Book to understand current economic climate

Post by exodusNH »

NYCaviator wrote: Thu May 19, 2022 7:56 am I'm interested in reading more on economics. We are in an odd time where bonds are not behaving as expected (they fell with interest rates), stocks seem massively overvalued, and real estate is through the roof. I'd like to read more to understand why this is from a macro standpoint. Any good book suggestions would be appreciated!
What do you mean "they fell with interest rates?"

A common misconception is that stocks and bonds are negatively correlated. They're not. They're nearly uncorrelated. This means they move independently of stocks. Many people expected them to move opposite stocks because that's what they have mostly done over the last 40 years. But that was just chance.
fabdog
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Re: Book to understand current economic climate

Post by fabdog »

bonds are not behaving as expected (they fell with interest rates)
that's exactly what bonds do... as interest rates rise, the value of a bond falls. When interest rates were falling, bond values rose. It's just math

I'm not sure any books exist that accurately cover the current environment. Someone has to write it, vet it, get it published... I'm sure still will come out over the next year.

Perhaps articles in the Economist would be a good starting point, as well as a number of investing/finance blogs

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Re: Book to understand current economic climate

Post by HMSVictory »

It doesn't specifically address todays issues but Devil Take the Hindmost - A history of financial speculation is fantastic.

Gives a great history of speculation and mania in the markets going back centuries.
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Re: Book to understand current economic climate

Post by JoMoney »

Bonds are performing exactly as expected with a rise in interest rates.
If you hold a bond to maturity they promise a return of principal plus whatever the interest rate is. If someone was advocating for buying bonds of a longer maturity/duration than your expected need of the money, in a period of the lowest historical interest rates practically ever... you learned a lesson in who not to listen to.

As far as investments go, read any book by John Bogle. I've been recently re-reading/browsing "Bogle on Mutual funds".
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Re: Book to understand current economic climate

Post by staustin »

NYCaviator wrote: Thu May 19, 2022 7:56 am I'm interested in reading more on economics. We are in an odd time where bonds are not behaving as expected (they fell with interest rates), stocks seem massively overvalued, and real estate is through the roof. I'd like to read more to understand why this is from a macro standpoint. Any good book suggestions would be appreciated!
Ray Dalio's Principle's for Dealing with a changing world order is the one I'd recommend. He has spoken out quite a bit about this issue from an economic standpoint. He also shares his thoughts regularly on his LinkedIn page.
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Re: Book to understand current economic climate

Post by sschullo »

Yeah, I read a few books mentioned here and they were helpful intellectually, but a book to explore your guts is called "hard knocks!"
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Re: Book to understand current economic climate

Post by Tellurius »

The Financial Times has great articles
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Re: Book to understand current economic climate

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NYCaviator wrote: Thu May 19, 2022 7:56 am ... Any good book suggestions would be appreciated!
Paul Samuelson wrote a book on Economics.
It's not exactly light reading because it's a university level textbook.
About the author:
Paul Anthony Samuelson (May 15, 1915 – December 13, 2009) was an American economist. The first American to win the Nobel Memorial Prize in Economic Sciences, the Swedish Royal Academies stated, when awarding the prize in 1970, that he "has done more than any other contemporary economist to raise the level of scientific analysis in economic theory". Economic historian Randall E. Parker has called him the "Father of Modern Economics", and The New York Times considered him to be the "foremost academic economist of the 20th century"
Details here: https://www.goodreads.com/book/show/322 ... In0&rank=2

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Re: Book to understand current economic climate

Post by bberris »

NYCaviator wrote: Thu May 19, 2022 7:56 am I'm interested in reading more on economics. We are in an odd time where bonds are not behaving as expected (they fell with interest rates), stocks seem massively overvalued, and real estate is through the roof. I'd like to read more to understand why this is from a macro standpoint. Any good book suggestions would be appreciated!
Here is a book about the 70's. The present is deja vu.
I haven't read the book.

https://www.amazon.com/Great-Inflation- ... 8362453055
billaster
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Re: Book to understand current economic climate

Post by billaster »

bberris wrote: Fri May 20, 2022 9:05 am Here is a book about the 70's. The present is deja vu.
I haven't read the book.

https://www.amazon.com/Great-Inflation- ... 8362453055
Just a clarification that the author of that book is newspaper columnist Robert Samuelson who is no relation to Nobel economist Paul Samuelson. As a non-economist, Robert Samuelson has a pretty poor record on economic analysis.
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Re: Book to understand current economic climate

Post by secondopinion »

retired@50 wrote: Thu May 19, 2022 9:29 am
NYCaviator wrote: Thu May 19, 2022 7:56 am ... Any good book suggestions would be appreciated!
Paul Samuelson wrote a book on Economics.
It's not exactly light reading because it's a university level textbook.
About the author:
Paul Anthony Samuelson (May 15, 1915 – December 13, 2009) was an American economist. The first American to win the Nobel Memorial Prize in Economic Sciences, the Swedish Royal Academies stated, when awarding the prize in 1970, that he "has done more than any other contemporary economist to raise the level of scientific analysis in economic theory". Economic historian Randall E. Parker has called him the "Father of Modern Economics", and The New York Times considered him to be the "foremost academic economist of the 20th century"
Details here: https://www.goodreads.com/book/show/322 ... In0&rank=2

Regards,
I do not know; it seems somewhat light to me. Of course, I definitely am on the mathematical side. I would get very bored if it were fluffy reading.
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Re: Book to understand current economic climate

Post by Call_Me_Op »

NYCaviator wrote: Thu May 19, 2022 7:56 am I'm interested in reading more on economics. We are in an odd time where bonds are not behaving as expected (they fell with interest rates), stocks seem massively overvalued, and real estate is through the roof. I'd like to read more to understand why this is from a macro standpoint.
Transition from low to high Inflation
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Re: Book to understand current economic climate

Post by johnson_brothers »

I don't think the current economic environment is something that's never happened before.

Here's my recommended primer on economics:
https://fee.org/resources/economics-in-one-lesson/
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Re: Book to understand current economic climate

Post by starboi »

NYCaviator wrote: Thu May 19, 2022 7:56 am I'm interested in reading more on economics. We are in an odd time where bonds are not behaving as expected (they fell with interest rates), stocks seem massively overvalued, and real estate is through the roof. I'd like to read more to understand why this is from a macro standpoint. Any good book suggestions would be appreciated!
Bid Debt Crises by Ray Dalio
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Re: Book to understand current economic climate

Post by LadyGeek »

This thread is now in the Personal Consumer Issues forum (book).
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Re: Book to understand current economic climate

Post by retired@50 »

secondopinion wrote: Fri May 20, 2022 11:57 am
retired@50 wrote: Thu May 19, 2022 9:29 am Paul Samuelson wrote a book on Economics.
It's not exactly light reading because it's a university level textbook.

I do not know; it seems somewhat light to me. Of course, I definitely am on the mathematical side. I would get very bored if it were fluffy reading.
secondopinion, I suspect you're somewhat rare.

Even John Bogle had a hard time with Samuelson's book. "Bell" in the quote below refers to Phillip Bell, Bogle's college adviser.
Princeton Alumni Weekly wrote: ...Bogle was a senior when he met Bell in 1950. Two years earlier, he had barely known the difference between stocks and bonds, and he almost lost his scholarship as he struggled through Paul Samuelson’s Economics: An Introductory Analysis. But Bogle soon grew confident, and he was determined to prove himself through his senior thesis...
Source: https://paw.princeton.edu/article/old-f ... -new-again

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If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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Re: Book to understand current economic climate

Post by martincmartin »

Keep in mind that macroeconomics isn't a very settled science. In fact, every few decades, there's a crisis because they got some major prediction totally wrong. To me, it feels more like post-hoc rationalization.

Microeconomics seems a lot more solid though, e.g. supply and demand really does happen all the time in a lot of contexts.
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Re: Book to understand current economic climate

Post by secondopinion »

retired@50 wrote: Fri May 20, 2022 1:54 pm
secondopinion wrote: Fri May 20, 2022 11:57 am
retired@50 wrote: Thu May 19, 2022 9:29 am Paul Samuelson wrote a book on Economics.
It's not exactly light reading because it's a university level textbook.

I do not know; it seems somewhat light to me. Of course, I definitely am on the mathematical side. I would get very bored if it were fluffy reading.
secondopinion, I suspect you're somewhat rare.

Even John Bogle had a hard time with Samuelson's book. "Bell" in the quote below refers to Phillip Bell, Bogle's college adviser.
Princeton Alumni Weekly wrote: ...Bogle was a senior when he met Bell in 1950. Two years earlier, he had barely known the difference between stocks and bonds, and he almost lost his scholarship as he struggled through Paul Samuelson’s Economics: An Introductory Analysis. But Bogle soon grew confident, and he was determined to prove himself through his senior thesis...
Source: https://paw.princeton.edu/article/old-f ... -new-again

Regards,

I kind of go deep in my reading; some of my harder books is like this textbook on commutative algebra: https://www.amazon.com/Commutative-Alge ... 387942696/. I am reading through https://www.amazon.com/Stochastic-Calcu ... =4&depth=1 and https://www.amazon.com/Stochastic-Calcu ... =4&depth=1, which are a bit more finance driven (for stuff like option pricing).

However, none of these were required reading; I chose to get them for reading on my spare time.
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Re: Book to understand current economic climate

Post by arcticpineapplecorp. »

NYCaviator wrote: Thu May 19, 2022 7:56 am I'm interested in reading more on economics. We are in an odd time where bonds are not behaving as expected (they fell with interest rates), stocks seem massively overvalued, and real estate is through the roof. I'd like to read more to understand why this is from a macro standpoint. Any good book suggestions would be appreciated!
1. as was said, bonds performed exactly as expected if you understand how bonds perform in both rising and falling interest rate environments.

2. stocks are massively overvalued? which stocks exactly? even if certain stocks are, could not other stocks be undervalued? are ALL stocks overvalued? Do sometimes bull markets last longer than many expect? And speaking of markets, is the market "massively overvalued"? I think it's fallen -18.87% for the ytd (based on yesterday's close, with todays, it could have reached -20% ytd). So how can it both be massively overvalued and on sale 20% off??

3. how often has there been instances of:
1. war
2. supply chain disruptions
3. massive stimulus
4. inflation
5. rising interest rates
6. sanctions and trade wars
7. large migrations
8. global pandemic...

at the same time??

could today's current "economic climate" (whatever that is) be a sample size of 1 and we have nothing to compare it to exactly?
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Dontridetheindexdown
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Re: Book to understand current economic climate

Post by Dontridetheindexdown »

I suggest The Ascent of Money: A Financial History of the World, by Niall Ferguson.
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Re: Book to understand current economic climate

Post by arcticpineapplecorp. »

Dontridetheindexdown wrote: Fri May 20, 2022 2:57 pm I suggest The Ascent of Money: A Financial History of the World, by Niall Ferguson.
A very good book (I have a copy). For those who prefer TV to reading there's the 4 part series from the book that was on pbs:
https://www.pbs.org/video/the-ascent-of ... o-bubbles/

thanks to johnson_brothers for the Hazlett reference. I came across that a long time ago. He's a good writer to explain these concepts simply to the average person.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
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