“Stop wasting time on those beach muscles.”*
I heard that phrase too many times in the high school weight room. I couldn’t have foreseen how helpful this lesson would be for investing many years down the road.
Beach muscles (pecs and biceps) look good on the beach, but are rarely helpful on the actual sports field. Sports muscles are mostly legs. Very few people like to do leg exercises. They are hard–being the major reason, and secondarily, they don’t get noticed on the beach.
Macroeconomic study can be helpful, you will certainly get smarter, if you dig into the details, just as your beach muscles will grow if you exercise them. However, in the weight room, as in investing, time is limited and what usually gets shirked in the process is the company-specific analysis and that’s where the real results are found.
The key here is not that people can’t or shouldn’t do macro study, but what usually happens is that people end up spending their most useful time on macro study and little time is left over to study those areas that bring the best results.
I thought I would post these thoughts as a certain young lady seems to be dominating the business press today.
The wit and wisdom of Galbraith provides a nice closing to this subject:
“The only function of economic forecasting is to make astrology look respectable.”
* This is the edited for family audiences version.