The U.S. economy was sputtering along for the past year making small amounts of progress. The stock market had risen to unexpectedly high levels considering corporate profits. Now, after China has seen its economy and stock market sputter, the repercussions are being felt around the world. The gloom over China’s prospects has caused a slump in markets all over the world. For many years, China has been counted on for growth. Now economists are scrambling to predict what’s going to happen with investments in coming months as the U.S. economic data has rapidly declined.
Christian Broda is no stranger to deal with fast-changing economic data. Broda, an accomplished lecturer and public speaker, has to use economic data to come up with models and reports that investors can use to guide their decision. Broda, who advised large investors, knows that the economic data will directly impact the price appreciation or decline of investments. He has published many of his strategies and philosophies in peer-reviewed journals over the years.
The economic data in the U.S. has shown a “soft recovery” since 2009. That means there have been improvements noted across a number of these verticals, but they have not been intense enough to cause complete optimism. There have been jobs added and consumer spending has improved, but it wouldn’t take much for the numbers to go backward. When a general discontentment sets in like it has after the debacle in China, the slide could happen quickly. For major institutional investors, all the signs indicate slowing down and taking a wait and see posture. They can’t do with all their funds, that’s for certain, but they can pull back on aggressive investments. Presumably, many already have. In China, the “smart money” exited the market long before the retail investors did. It seems very likely that this also happened in all the other markets around the world. Why does the “smart money” know when and how to exit? Mainly because of their thorough knowledge of the U.S. economy and the world markets.
This is the main reason large investors employ economists on staff or as consultants. They need to know about the direction of the stock market before the rest of the world finds out. That what the term smart money means, after all. It refers to investors who have more up to date information that the average retail investors every could. They pay for this information, but the cost is generally spread across an investment base that is so large that it ends up being a small percentage. Economists end up earning every penny when investments pay off the way they’re expected to. The one thing all investors have to avoid is a complete loss, which only happens when they’re ill prepared.