Inter-relationship of Bonds, Equities, Futures etc

Discussion in 'Economics' started by Mut1ey, Apr 2, 2004.

  1. Mut1ey


    From reading books like Pit Bull and Trader Vic one area that I need to learn more about is the relationship between the different financial instruments on the macro and international level.

    For example, a socialist government is elected in country X so expect the following broad shift of money from instruments of type A to those of type B.

    I read these kind of statement but struggle to find a clear - "simplistic" overview of these principles. If anybody has a picture or simple explanation they can share that would be great. Or if there are any books that may help a joe public like myself then please mention them.

    I have read the Instant Economist.

  2. Harry


  3. This is a subject I am very much interested in, also. Thanks for the link Harry. Looks like a good start.
  4. If you want to get a much better grip on this than what Murphy's book offers, read Ludwig Von Mises economics books.
    There are lots of useful stuff and free books on this site about his work.
  5. Harry



    The influences of economic factors on the financial markets are a subject I'm very much interested in - and Murphy's book was the only one I have found to cover various relationships between the stock market, bond market, currencies, inflation, ...

    From a first look the books of von Mises seem to be purely economic but do not cover the influences of deflation/inflation, ... to the financial markets ... the link you posted seems to be on the subject of war and economy ... do you know of any specific texts on this site that cover the relationship to the financial markets?

    By the way - von Mises lived in Austria where I also come from - and I have no in deep idea of his work :( - but at least it expalins my bad english :D

    Thanks for the link - I will definitley go through the site ...

  6. von
    See this book list. the Murphy's book is basically a descriptive book, one needs to understand why things happen the way they happen. That is why Mises work might help those who want a sound and significant understanding of the theories and principals.
    The interrelationships occur due to state policies and not in isolation. Mises work will help you understand that.
    Your country has done significant contribution to economics, so much so that there is a branch of economics named after it- Austrian Economics. Understanding of that can help you significantly in making money.
    Just my opinion.
  7. DVB


    I personally didn’t like.
    All it has is superimposed charts with absurd economic conclusions. The statistical analysis is limited to some correlations for limited periods of time, and broad conclusions derived from those relationships, which, by the time the book have published, have already changed. It may give one some ideas for future statistical study, but this is about it. If you really want to know what happened in the past, get 100 years worth of economic, commodities and equities data, and do your own analysis. But even then, the amazing quality of inter-market correlations is that they constantly change. When you think you found something, back tested it and ready to trade, the cycle have changed.


  8. jeremy


    Try Mark Boucher's book, "The Hedge Fund Edge".

    Uses the Austrian School of economic theory (aka Mises) with the equity and bond markets. Interesting that "Trader Vic" Sperando was also interested in the Austrian School of Economics.

    The Hedge Fund Edge provides a different perspective from the normal Technical Analysis books you find everywhere, IMHO. (And I mean everywhere.)

    On a side note, I am really bored with reading all these Technical Analysis techniques, so I have given up on buying more books written by so-called Technical Analysts because they have nothing new to say. A yearly subscription to Stocks & Commodities Magazine or Active Trader should suffice.

    I also find it funny that Technical Analysis authors are now moving towards Fundamental Analysis (e.g Larry Williams). I may be unfair but I haven't touched the book by John Murphy coz he's a technical analyst and I probably can guess what he will write in there. You just need to know
    i) how the bond, commodity and stock markets are related in the economic cycle
    ii) how to reference external data in your Trade Station program to test out your ideas

  9. The currency market/FX market is by far the largest and in my opinion drives all the other markets (from a macro perspective).


  10. Bonds emission = New Dollars emission = Government debts = Future People tax increase

    What do they do with that surplus of money ? Instead of financing the real economy they are creating a bubble on equities, that generates artificial increase of corporates equities portfolios since economists have now clearly showed that financial assets and not industrial ones now constitute the main source of benefits - including for Microsoft - so that a (still very few) number of independant financial analysts have warned that it has now become explicitly a pyramidal scheme (but most people as in any great financial mania just don't believe or even suspect it since medias avoid to alarm except when the damage will be done) - so the logical bubble in equities. As for futures it's just a mean to amplify the bubble with a fraction of capital. Bonds and Derivatives market have been invented not with modern market but at least since the Roman Empire. And the decline of a civilisation always begin because or with an extraordinary financial bubble which just translates that real economy is not functioning any more.

    #10     Apr 4, 2004