Chapter 2 - A Global Market (Sneak Peak...)

“You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.”  – Peter Lynch, famous American investor

This oday’s investor lives and breathes in a global market.  Opportunities for investment need not lie within a single market or nation.  One can easily explore and exploit opportunities abroad.  Markets all around the world are welcoming investors with open arms.  Markets are becoming integrated.  Moreover, they are becoming more accessible to outside investors.  What’s more, open markets from around the world tend to behave in similar ways.  Economic forces such as the laws of supply and demand drive markets to be efficient.  In North America we are familiar with the clockwork of our economies due to the open economic policies our governments have adopted.  Many economically advanced nations such as those found in Western Europe have prospered equally due to their openness.  Many emerging nations such as China and India are opening up their borders and markets as well.  The savvy investor needs to be aware of investment opportunities that are emerging from these new markets and also how to capitalize on them.  Before doing so, one must gain a basic understanding of the broader socio-economic context.  In other words, one needs to examine what drives markets.  Many economic factors have an impact on financial, and more specifically, stock, markets.  In this chapter we will examine the important ones.  In addition, we will look at different types of markets and how they behave, along with which sectors and industries are out there.  But first we need to take a step back and look at the prelude to how and why we are becoming a global market.  We need to take a look at globalization.