Economists & Investing Based on World Events

Published Oct 18, 2020 3 min read
Matthew Kovach
PhD – Brains Chief Economist

Here at Brains, we invest based on major events. But more importantly, we help you find personalized investments based on how you believe world events will unfold. We have crafted our own boutique, proprietary funds to align with different world events. Do you believe the world is headed towards overpopulation and food shortages, or will new technologies emerge to increase crop yields? Do you believe there will be major wars in the future, or will political tensions ease in the coming years? Will a superbug cause catastrophe, or will affordable medical advances occur to stave off new threats?  

The largest financial firms look at the world in a similar fashion and have in-house economists who analyze these macro-economic factors on a global basis as well. Brains is the only personal investment platform in the world which uses economists in the same way the big guys do. 

What exactly economists do is often not clearly understood. At its most basic level, economics is the study of trade-offs; how the getting of one thing requires the giving up of something else. For example, an economist might study how consumers make their own consumption versus savings decisions, which can be thought of as a trade between consumption today versus consumption in the future. 

Many economists are researchers at universities, but many more work for government agencies and private companies. Economists often have a major role in financial firms and banks because their theoretical models and ability to analyze complex data help firms understand “where the economy is going.” Forecasting the future of the economy is never perfect; economists are not fortune tellers with crystal balls. Yet the tools of economists do provide some guide to the future, sort of like how a flashlight can light the path ahead of you. This means understanding how interest rates might change over time, how demand for different goods and services will evolve, and how major world events, from political shakeups to disruptive technologies to natural disasters, might influence economic events.   

While the world is constantly changing, many of these changes have predictable effects. Some of them are obvious, like how climate regulation would likely lower profits for oil companies.

Others less so, such as how bad weather in California could lower Chipotle’s profits (hint: Avocado prices will increase!). 

Each way the world can unfold has results in different market consequences, and so the problem of choosing the right investments is complex. We here at Brains have simplified the investment problem for you by doing the hard work to construct the right portfolio for each event. All you have to do is tell us what you think.