Macro Trading The Commodity Markets
As global macro traders we have the special distinction of being the only people in the room ho trade stocks, bonds, currencies, and commodities. Instead of focusing on just one asset class we look at everything. We do this for a few reasons, not the least of which is so that we can better understand each asset class and what is happening.
If you are a stock investor and you don’t pay attention to the commodities markets then how on earth are you able to determine a decent future valuation for any non service oriented company? If you dont know the price they pay for their raw materials you will be at a disadvantage to the investor that does follow the commodities market.
Global macro traders will focus and even price out the potential future price levels of commodities before making a big sector bet in the stock market. They of course also do it before making a trade in commodities. One thing that is especially nice about commodities is that they rarely vary much between different companies. Oil costs the same for every company as does tin, aluminum, and steel. There are exceptions but not many which makes it easier to price things out for the global macro trader.
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