My Journey in Economics
How I came to seek the intertwinement of economics with spirituality. Part 1: Economics.
An Economics Education
During an academic counseling session midway through my freshman year at Boston University, my undergraduate career advisor declared, “I am signing you up for Microeconomics 101.”
I cringed when he said this.
I had come to college to delve into world history and international politics, not money matters, I protested.
But he was a forceful man and did not listen. Instead, he registered me for the course and sent me on my way. So in my second semester of that year, I had my first contact with concepts such as market equilibrium, income and demand elasticity, budget constraints, utility functions, cost curves, and consumer choice and preferences.
I was immediately enthralled.
For those of you that have encountered an economics textbook, you know that they are filled with graphical depictions of every day transactions of exchange. Much of what underlay these graphs made simple, intuitive sense, such as the law of supply and demand; if demand for marigolds went up, then price and supply would naturally follow, until demand adjusted downwards again towards the equilibrium price.
However, the formulaic representations themselves were powerfully attractive to me. There was something elegant, logical and precise in the way economists explained phenomena. I dutifully copied these graphs into my notebooks, learned the laws and formulas, and ended up making economics the second of my two undergraduate majors.
A Career in Capital Markets
My subsequent life path has kept me in close contact with the theory and practice of economics. After a four-year stint in the United States Army, and graduate schooling that included additional coursework in the field, as well as the nitty-gritty of a modern business education (corporate finance, statistics and accounting mostly), I began a career in financial services that lasted nearly three decades.
I spent the whole of this time in equity capital markets, more commonly known as stock markets. I became a Chartered Financial Analyst, and worked at both regional and global investment banks. Most of this time, I served as an equity research analyst, a professional who applies financial analysis and valuation techniques to publicly traded companies, and makes recommendations on what their stock price might be worth. I also served as a director of research and as a salesman pitching investment ideas to the portfolio managers of large mutual and pension funds.
Working with Economists
During this time, I worked closely with practicing economists on a daily basis. Economists in investment banks are primarily “macro” economists. This means their analytical focus is on high-level economic variables like the national income accounts (such as gross national product and its components: consumption, investment and foreign trade), consumer price inflation, interest rates, and foreign exchange rates, among others.
To gain insight into these high-level variables, these macroeconomists keep close tabs on various “high frequency data points:” bits of information which come out on a regular, recurring basis, such as changes in monthly consumer spending, personal income, new home construction, monthly employment data, consumer confidence, construction data, and central bank policy meetings.
Economics and Financial Models
The economists I worked with provided important inputs for the financial forecasting models I built on individual companies during my years as an equity analyst.
For example, if the chief economist of the bank predicted that the United States’ dollar might be worth more or less of a particular foreign country’s currency, or that the economy of that country might grow slower or faster than in earlier years, that could mean higher or lower profits for a company that did business there, which in turn might mean a higher or lower stock price.
If he predicted that government regulation might favor or hurt a particular industry, then that effects profits and thus company valuation.
If she forecast that interest rates might move up or down, this could affect a company’s financial expense, as well as the value of securities whose prices are heavily determined by interest rates, such as government and corporate bonds.
Gratitude for a Professional Experience
I am deeply grateful for having had this professional experience. It was a career well- suited to my analytical nature. It permitted me to exchange points of view with extremely intelligent people in many countries, as well as allowing me to provide a comfortable material standard of living for my children and family.
Because I engaged in countless dialogues over many years with investment managers, fellow financial analysts, corporate leaders and company management teams, I gradually developed an instinctual sense for “the mind of the market;” that is, how business people and investors often think, as they face the requisite challenges of their professional realities.
A Spiritual Journey
My journey in search of spiritual awakening began in 2006.
As is often the case in such journeys, it started with a crisis.
I shall tell that story next week.