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Whether we're looking at economic fundamentals or scouring historical data for clues, Fisher Investments Press author Michael Hanson recognizes three basic categories of patterns that can influence stock markets: Economic, Political, and Sentiment. Always think extreme with these. Most factors aren’t saying much of anything about market direction most of the time. When analyzing with the three big drivers, look for big things that the market hasn’t yet priced in.
Economic
Obvious but true: Fisher Investments Press author Michael Hanson believes big economic trends often have the power to flow through and broadly move stock market valuations. But often not exactly how we'd think. Fisher Investments Press author Michael Hanson knows many pore over economic data—reports, surveys, and the like—scores of hours, trying to find some useful, secret nugget. Hanson has done so himself as a matter of fact. And after doing so for some years, here is what he’s found: Economic indicators are useful approximations of a situation and nothing more.
Economic indicators are any data that claim to be descriptive of the macroeconomic environment. That is, GDP readings, unemployment numbers, personal incomes, and so on. Don’t put full trust in them. Most of them are broken beyond repair—esoteric calculations based on shoddy surveys from politically biased think tanks or government bureaus with sloppy methods.
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