The Secrets of Economic Indicators: Hidden Clues to Future Economic Trends and Investment Opportunities, 2nd Edition
Review From The Wall Street Journal, November 22, 2005: “Whether you’re tracking pop culture, high fashion or health care, all things are connected, and economics is the tie that binds them all. For those who need to know more about economic trends and for those who haven’t the skills or background in the field, Mr. Baumohl’s book is the real deal. He miraculously breathes life into economic indicators and statistics.” From Library Journal: “Baumohl, a former economics reporter for Time magazine, has written a tremendously useful source on economic indicators. Baumohl considers a variety of factors when describing each indicator, such as what exactly it measures, how i…
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On any given weekday, stocks and bonds gyrate in response to some economic announcement.
Bernard Baumohl, a Time magazine economics writer with more than 20 years of experience, has written a guide to these indicators and their importance to the financial markets.
The book promises to become dog-eared quickly. In concise language it explains what Baumohl indicates are the most influential U. S. and International Economic Indicators. Beginning in Chapter 2, the author defines the phrases and concepts essential to an understanding of the indicators.
In Chapter 3 he jumps into the heart of the matter: U. S. economic indicators. Each indicator is evaluated using the following criteria:
* Why is it important?
* How is it computed?
* What does it day about the future?
* How might stocks, bonds and/or currencies react to its announcement?
In Chapter 4, he examines the 10 most influential foreign indicators using the same criteria.
In the final two chapters, Baumohl provides a list of web sites that compile economic data. What in the past costs thousands of dollars is available on the web at no cost.
If any facet of your life is effected by these indicators, you owe it to yourself to keep a copy of this book nearby.
5.0 out of 5 stars
Be your own economist
Capital markets fluctuate quite a bit because buyers and sellers adjust their pricing expectations based on newly released economic data.
5.0 out of 5 stars
great book
I teach macroeconomics to MBA students at NYU and have read pretty much everything that’s out there on macroeconomic indicators.
Bernard Baumohl’s “The Secrets of Economic Indicators: Hidden Clues to Future Economic Trends and Investment Opportunities” starts off with a riff on how investors got sold out by their “expert” advisors and even the stock-issuing companies themselves during the recent crash. He contends investors are in the need for better guidance. The solution, he says, is an individual investor do-it-yourself approach to fundamental macroeconomic analysis based on the reported data that underlies both the domestic and international economy.
Make no mistake, this is one of the most useful and fundamentally sound readings of how economies really work you will ever see – much more revealing and educational than a raft of academic books purporting to teach us how the theoretical economy is supposed to function. This book magnifies the real workings of an economy (daily, weekly, monthly) – the inputs that produce the outputs – and how the data generated from those workings is reported, analyzed, and used.
Baumohl lists 4 weekly, 43 monthly, and 9 quarterly releases of data in short outline form along with what they are, when they’re reported, and how they’re computed, along with their expected effect on the stock market, interest rates, and the dollar.
His goal, he states, is to answer the question of which indicators pack the greatest wallop in the financial markets and which ones are known for doing the best job predicting where the economy is going, thus influencing investments. He assigns a relevance rating to each of the indicators.
It’s easy to get overwhelmed quickly and Baumohl is right when he laments that “There is too much economic information out there, and not all of it is useful.”
He should have added “not all that accurate” either.
As you leaf your way through the compilations, you come to realize that the “numbers” that move the markets are frequently incomplete. The queried respondents upon whose businesses and operations are being used to create data are notoriously negligent in meeting reporting deadlines which brings up the question of whether we ever get a full reading of what’s being reported. Thus the need for “restating” next time around. But by “the next time,” those numbers are irreverent and relegated to history. Question: So, was that big market move last month based on bad info, and if so, will it correct itself when the old data is corrected? Not likely, because a new set of questionable data just got reported and is now at center stage. Deja vu all over again.
For all the questions it raises, this is a good attempt at trying to get a grip on the maze of financial accounting we’re still trying to clean up, but it points out more holes than it fills.
One thing Baumohl doesn’t address which would be a good subject for a follow-on book is that indicators don’t have the same influence consistently through time. Each seems to have a life all its own. From the body counts (Vietnam) of the late 1960s, to the oil price increases of the mid-1970s, to the prime rate increases of the late 1970s, right on through the monthly deficit numbers of today, one influential indicator periodically rises to become the focal point of the press and the Wall Street pundits. Relative importance comes and goes with the seasons, and it would have been good to see a 40-year chart clearly delineating how dominant indicators of the time influenced direction of the various markets.
Another issue not confronted is the role played by hedonic influences on various indicators. How should we adjust for increased computer RAM or safety features of automobiles or effectiveness of medical treatment?
A third question concerns whether the market’s reaction operates in a vacuum. Is the day the report comes out merely one more in a series of “jolts” or does it become the tipping point that truly reverses a trend which was waiting for an ignition spark?
A final observation sums up the underlying but unspoken concern about the whole system of governmental collected and reported figures. The world’s most important investor (Alan Greenspan) obviously relies on these figures to make financial and monetary decisions. It is disconcerting to read how many of these indicators are less than what one would expect them to be. Whether Greenspan can make the correct decisions based on sometimes questionable statistics is a question that perhaps will never be answered.
In the mean time, we can all learn a lot about the “numbers” that have an increasingly important impact on our daily lives, to say nothing of our investments.
Read it and consider your options.
For a different angle on how the markets work see Ron Insana’s excellent “The Message of the Markets” (2000) and “Trendwatching” (2002) which deal with the reality of prices rather than suppositions.
1.0 out of 5 stars
This Book is Totally a Waste!
This book offers nothing that can’t easily be obtained by a simple internet search. The book reads like a manual with no soul whatsoever.
Baumohl, a former economics reporter for Time magazine, has written a tremendously useful source on economic indicators. Using examples from real life, he starts out by explaining in detail the importance of these indicators to the investing community and defining the terms used when discussing measures of economic performance. The most valuable section of the book provides detailed descriptions of over 40 economic indicators, among them employment, consumer spending, national output and inventories, housing and construction, foreign trade, and productivity and wages. Baumohl considers a variety of factors when describing each indicator, such as what exactly it measures, how it is computed, where to find the relevant report on the web, the day and time this report is released, the source of the information, and how often the information is revised. He also discusses the market impact of these indicators on bonds, stocks, and currency. The book ends with profiles of international indicators and a listing of where to locate them on the web. Bottom Line: Although this book is marketed as a tool for investors and is not organized like a typical reference book, it belongs in the reference collection because it explains so clearly what the various economic indicators are and how to locate data about them. Recommended for all libraries.
5.0 out of 5 stars
Eye Opener
This book really made market indicators simple and easy to understand. I appluad the author for his format.
5.0 out of 5 stars
How And Why The Markets Move
Secrets of Economic Indicators is an excellent book on what drives and affects the economy and the markets.
4.0 out of 5 stars
Great guide to economic indicators
This is an esaly introduction to economic indicators, mainly the american ones. It contains some interesting tips about indicators, like “thumb rules” in some cases.
5.0 out of 5 stars
Excellent book
Very good book to get an idea about all the economic indicators that can make or break the economy.
5.0 out of 5 stars
Excellent Reference on Economic Indicators
This book does a great job of explaining a long list of macro-economic indicators, their application and relative predictive importance.
5.0 out of 5 stars
First Class Economic Resource
If you’re an inspiring investor or seasoned pro; a corporate executive or fresh out of school Mr. Baumohl’s “The Secrets of Economic Indicators: Hidden Clues to Future Economic…
4.0 out of 5 stars
A good start
For anyone interested in understanding the terminology behind the financial pages and Web periodicals, this book does its job.