Macro Trading Versus The SP500

Macro Trading has many benefits versus equities. As mentioned before a global macro trader can trade in any asset class, in any country, using any strategy. So what are the benefits of these freedoms? Well there are many but here we will focus on two of them. First is that using multiple asset classes, countries, and strategies we are able to get a more consistent stream of returns. When one asset class zigs one is zagging. If we blend them together well we can end up with a very steady stream of returns.

This chart shows $1000 invested in the Barclays Group Global Macro Index versus $1000 invested in the SP500 from the beginning of 1997 to the end of September 2007.

The other major benefit we will discuss here is that our risk profile is much better. The worst drawdown in the SP500 since 1997 was -46.28%. Now compare that to the Barclays Group Global Macro Index where your worst drawdown was only -5.22%.

Charts showing drawdowns for Macro Index and SP500 1997-September 2007

You can see that there is more than just a slight difference. Where the SP500 is more or less at breakeven for the past seven years the Macro Index has never taken longer than eight months to make a new high.

If you are only trading or investing in one asset class or if you are only trading in the United States please look at some of the benefits of adding some asset classes, countries, and trading strategies to your portfolio. Long term we think you will be happy you did.

Happy Trading,

The Macro Trader

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