Poll: How Important Is an Understanding of Geopolitics to Your Investment Decision-Making Process?
In a poll conducted earlier this week in the CFA Institute Financial NewsBrief, we asked readers how much their understanding of geopolitics affects their investment decisions.
How important is an understanding of geopolitics to your investment decision-making process?
In a world of bewildering complexity, an understanding of the ways in which people, power, personal preferences and geography influence future trends is essential. Furthermore, a simple geopolitical framework can lead to a better understanding of the investment implications of complex world events.
For example, simply looking at a map of the world shows that Ukraine is squeezed between two global powers: Germany and Russia. One could expect Germans and Russians to have a political and economic interest in their periphery and that there would be turbulence in Ukraine periodically because of this tug-of-war of influence. Other global hot spots are also easy to identify, especially when coupled with an understanding of demographics and the news.
Impressively, geopolitics is “very important” in making investment decisions to more than 63% of 685 readers and “slightly important” to 30%. Such low-hanging predictive fruit is difficult to come by in the investment business.
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