Broke To Woke

No matter who you are or what you do for a living, having a general economic awareness — meaning a general sense of what’s happening in your economic environment — can make the world of difference in your financial standing. It can change the way you understand the world around you, putting a stethoscope to the current pulse and pace of our economy.

Ultimately, if your survival and ability to thrive depends on the economy, then it makes sense to be as in touch as possible with what’s happening. If you’ve got some skin in this game (which you almost certainly do), it’s best to know what is going on in the game.

Personal competence is key and it starts with attaining the right information. And I don’t just mean knowing what’s happening in the news or knowing what’s trending on Twitter. Headlines can help you but won’t always give you an accurate or fair read on what’s really going on. Markets, however, can fill the gaps of false information with some objective truth, some numerical proof. Review headlines and the general social commentary, then compare it to what the markets are doing and you’ll find, sometimes the two match up. Other times, they don’t. The markets aren’t a perfect fact checker but market awareness can help disseminate false claims and fake news.

While the economy is a vastly complex and difficult thing to grasp, you can simplify the many moving parts by boiling it down to three basic elements, or touch points, which give you a brief understanding of the health and general direction of where and how things are going.

Those three touch points are as follows.

Dark Hunt Triptych by Philip Colbert, the Andy Warhol of the Instagram Generation

1 | Fear Awareness: Pay attention to the general sentiment and energy of a society and of the overall marketplace. What’s the overarching attitude of the economy? Here’s how to gauge fear, also referred to as volatility, in the market.

  • Volatility Index (VIX or /VX) which measures how volatile stock prices are currently. When the VIX is high, overall stock prices are all over the place, moving further from their historical norm. On the other hand, when the VIX is low, prices are steady and relatively close to where they’ve been. High VIX = high fear and uncertainty for the future of the economy. Low VIX = a calm and easy going market with not much political or economic uncertainty among investors.
  • Social Sentiment is also a great measure of the economic climate. This can be felt by noticing and experiencing first hand what’s happening in your physical economic environment. Are there more for lease signs than busy shops and restaurants? If so, we may be falling on hard times. Are people out and about, spending money, eating at restaurants and going to movies? Then the social sentiment is positive and people will be likely to spend more money, stimulating the economy; perhaps even save more.
  • You can always get a gauge of social sentiment by going on Twitter or any of the social platforms, to see what people are saying about the current state of their own personal economy, their job or work situation, or any content that signals where they’re at financially. You can really tell the temper of a society by which apps are currently most popular. Our daily landscape is thick with absurd messages and meaningful signals. Notice them. They not only have social and cultural significance; they’re often rich with economic significance.
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Disclaimer: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of ...

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