Learn (Economics) · Course
Economics for Investors: From Basics to Expert
From the basics of economics to interest rates, inflation, exchange rates and employment, and how they connect to stocks. Build up step by step and develop the eye of an expert who can read the market on your own.
Getting familiar with the economy
Understand why stock prices and the economy are connected, and grasp the big flows of the economy (circular flow, GDP, business conditions) through diagrams.
Know the economy and you can see stock prices
Stock price = earnings × multiple (P/E). The economy shakes both of these knobs.
Read✓ ReadThe economy is a big circle of money
See in a diagram how four agents (households, businesses, government and the rest of the world) exchange money and goods.
Read✓ ReadPrices are set by supply and demand
Learn how prices move through supply and demand curves and the memory chip price cycle.
Read✓ ReadGDP is the report card of a nation's economy
Read nominal and real GDP, growth rates, and the breakdown into consumption, investment, government spending and net exports.
Read✓ ReadThe economy has four seasons too
See the business cycle of recovery → expansion → slowdown → recession over real data.
Read✓ ReadThere are indicators that tell you about the economy in advance
Learn about leading, coincident and lagging indicators and what a PMI of 50 means.
Read✓ ReadInflation: the value of money
Learn why rising inflation shakes interest rates and stock prices, and read inflation indicators yourself.
Inflation: the same money buys less
Rising prices mean a decline in the purchasing power of money. Calculate what KRW 10,000 will be worth in 10 years.
Read✓ ReadHow to read CPI: headline and core
Learn YoY vs. MoM, core inflation, and how to compare with forecasts.
Read✓ ReadPCE and PPI: the inflation gauge the Fed prefers
The Fed's 2% target is based on PCE. PPI is the cost-side inflation that companies feel.
Read✓ ReadDeflation and stagflation
Compare an economy where prices keep falling with one where prices rise amid a recession.
Read✓ ReadWhich assets hold up when prices rise?
Use the 2022 energy sector case to see which assets are strong or weak against inflation.
Read✓ ReadInterest rates: the price of money
Understand that interest rates are the benchmark for all asset prices, and explain how bonds, growth stocks and bank stocks react.
An interest rate is the price of borrowing money
See deposit and loan interest, and why borrowing gets harder as interest rates rise.
Read✓ ReadWhy do central banks raise and cut interest rates?
Learn about the Bank of Korea's Monetary Policy Board and the US FOMC, and the two goals of price stability and employment.
Read✓ ReadThe policy rate and market interest rates are different
See how KTB and US 10-year yields price in future policy rates ahead of time.
Read✓ ReadBond prices and interest rates are a seesaw
For bonds already issued, prices fall when rates rise and rise when rates fall.
Read✓ ReadTerm spread: the traffic light of the economy
See what it means, and where it falls short, when short-term rates rise above long-term rates (an inversion).
Read✓ ReadWhy do growth stocks hurt more when rates rise?
Calculate with discount rates and present value why earnings far in the future are more sensitive to interest rates.
Read✓ ReadInterest rates and sectors: why do banks and insurers differ?
Sort out with cards which sectors smile and which cry when rates are rising.
Read✓ ReadEmployment and the economy
Read employment and consumption indicators, and learn that the market reacts to the gap versus expectations, not to the number itself.
Employment indicators: nonfarm payrolls and the unemployment rate
Learn how to read the number of jobs added and the unemployment rate in the US jobs report.
Read✓ ReadThe market reacts to the gap from 'expectations'
Consensus and surprise. A good number becomes bad news if it is worse than expected.
Read✓ ReadWhen bad news becomes good news
Compare when weak employment leads to rate-cut expectations and when it leads to recession fears.
Read✓ ReadConsumption and business investment: the engines of the economy
Read the state of the economy's engine through retail sales, consumer sentiment and capital expenditure.
Read✓ ReadExchange rates and exports: the key to the Korean market
Understand exchange rates and exports, which matter especially for the Korean stock market, and explain how they help or hurt different sectors.
What is an exchange rate? What USD/KRW at 1,400 means
Sort out the confusing expression that a higher exchange rate = a weaker won.
Read✓ ReadWhy do exchange rates move?
See the Korea–US rate differential, the trade balance, and the rush into dollars during crises.
Read✓ ReadWho benefits from a weak won?
Weigh on a scale the mixed gains and losses of exporters and companies that import raw materials.
Read✓ ReadExports are the heart of the Korean stock market
See how the monthly trade statistics released on the 1st and KOSPI have moved together.
Read✓ ReadForeign investors and the exchange rate
See how expectations of a stronger won lead to foreign investor buying.
Read✓ ReadOverseas stocks and exchange rates: FX exposure and currency hedging
Overseas stock returns = stock price return + currency effect. Learn what a currency-hedged ETF means.
Read✓ ReadCommodities and the global economy
Connect how oil, gold, copper and the US and Chinese economies transmit to Korean stocks.
Oil is the blood of the economy
See the chain from oil → inflation → interest rates and the impact on refining, airline and chemical sectors.
Read✓ ReadWhy does gold rise when people are anxious?
See the relationship between gold, an asset that pays no interest, and real interest rates and the dollar.
Read✓ ReadCopper and chip prices: the thermometer of the economy
Read the economy and the semiconductor cycle through Dr. Copper and DRAM prices.
Read✓ ReadWhen the US sneezes, Korea catches a cold
See how the US stock market, the Fed and the dollar affect KOSPI.
Read✓ ReadChina's economy and Korean companies
See how the cosmetics, steel and chemical sectors relate to Chinese consumption and the property cycle.
Read✓ ReadConnecting the economy to stocks
Connect the indicators you have learned so far to sector selection, valuation and investor sentiment to interpret the real market.
Stock prices move before the economy does
See, through the 2020 case, why stock prices price in the economy several months ahead.
Read✓ ReadDifferent sectors are strong in different seasons of the economy
Sort out the strong sectors in each phase with the sector rotation clock.
Read✓ ReadReading the sector map through interest rates, exchange rates and oil
Read the Macro Map's impact map and macro environment scores yourself.
Read✓ ReadP/E and P/B: rulers for measuring expensive vs. cheap
See price relative to earnings, price relative to assets, and how interest rates relate to a fair P/E.
Read✓ ReadLiquidity: when money is released, assets rise
Learn about the money supply (M2), quantitative easing and tightening, and liquidity-driven rallies.
Read✓ ReadReading investor sentiment: VIX and margin loan balance
Read the signals of overheating and fear through the fear index and investing with borrowed money.
Read✓ ReadIn practice: your own routine for reading the economy
Interpret the news, learn from crisis cases, and finish with a checklist you can repeat every week.
Practice interpreting economic news headlines
Practice breaking a headline down into cause → reaction → impact.
Read✓ ReadLearning from crisis history: 2008, 2020 and 2022
Compare the causes, policy responses and recovery times of three crises.
Read✓ ReadRespond rather than predict: how to use your economics knowledge in investing
See how diversification, DCA and rebalancing help you hold up even when your outlook is wrong.
Read✓ ReadGraduation: your own weekly economic checklist
Build seven indicators to check every week and a 10-minute Monday morning routine.
Read✓ ReadThis is educational material and not investment solicitation. There is no guarantee that past relationships will repeat in the future.