Macro Trading vs SP500 1997-October 2008

Macro Trading has several advantages to regular trading or investing. Most people either are long only or they trade one asset class. Instead of focusing on one area of the financial markets, Global Macro Traders focus on the best risk to reward opportunities they can find regardless of asset class or whether it is long or short. By not tying ourselves to one source of returns we can better balance our risk profile with our return objectives. Global Macro allows one the flexibility to not be dependent on any one thing or be held hostage by the downside of a particular asset.

Here we are comparing the returns of the Barclays Global Macro Index against the SP500. As you can see the Macro Index has performed significantly better than the SP500 from 1997 through the end of October 2008.

Global Macro Trading Index

While the Global Macro Index is currently in a drawdown it is far smaller than that of the SP500. The SP500 is down -37.47% while the Global Macro Index is only down -7.14%.

SP500 and Global Macro Index drawdowns

Anyone that is still tied to the notion that all you need to do is buy and hold has lost money over the last 10 years. While we hope that investors are finally coming around to the idea of absolute returns and risk management, we also realize that investors by nature are irrational and that they will continue to repeat the same mistakes.

We here at The Macro Trader try to generate absolute returns because a relative loss is still a loss. If you are interested in learning more please send us an e-mail.

Happy Trading,
The Macro Trader

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