Determining intrinsic value of economies

Just reading some annual reports by warren buffett and was actually wondering how one would do an analysis of intrinsic value of a whole economy and then either invest in the economy's currency or stocks of that particular economy.

Any ideas if there are any books or other resources that go into detail about determining intrinsic values of economies? (like for example in stocks you do a lot of financial statement analysis, look for certain ratios and other stuff that can't be so easily calculated to arrive at the appropriate intrinsic value). Anyone knows of a guide?

not sure of intrinsic value or how you would trade it...

one thing you can do, or at least my preference, is to gather all the ishares, proshares and such..... proshares has an ultra series.....

i use metastock for this......h

Why not look at natural resources and human capital (demographics, education, productivity, institutions, etc.)

Warren has complete faith in the system he is more a buy and hold investor allwel if you look at his fund performance the treasuries did a better job.

Sometimes i think warren buys just stuff what is beaten to crap because of his faith in terms it is undervaluad according to him like his recent bets on bac.

Anyway with the fed behind him he isnt that stupid because most are to scare to buy when the market drops like shit you get those idiots on tv who predict the market crash like that goldman sachs guy alessio rastani what a joke.

1 simple rulle in this market dont fight the fed this guy in a idiotic manner explains it verry well.



Call me stupid but this drop what maybe might come will buy it again why because i have no fear.

Will it collapse yeah probally somewhere but not so long the fed is there and this weak nfp they have just a reason to do qe eventually. In last fomc they sayed no but believe me they will. But eventually it will colapse and whe will get our doomsdays in the markets but not know imo so let all doom suckers talk bulls make money from them everytime they want to short apple suckers.

this is actually a valuable threat based on empirical values as opposed to other started here in FF.


GDP= (C+I+G+(X-M)
C=private consumption
I= gross investments
G=government spending
X= exports
M= imports

You could look at education
industrial capacity
type of economic model
money supply, inflation and deflation
fiscal and monetary policy

Market share
potential risks to their economies
and trend of GDP growth.

IMHO, the "intrinsic value" of a "whole economy" often has little to do with specifically investing in that currency or related (if any) stocks.

Take as an example, Australia. Indeed, one could have invested in the Aussie $ and related industry. Particularly, mining.
But would you really be investing in Australia or China? As has become apparent, the Australian economy is somewhat dependent upon Chinese imports.

Another example; the EU is in shambles yet still trades at, well.... a rate far higher than seems feasible.


Warren gets great bargains in part, because he can invest huge sums of money. A little research will reveal that the BAC deal was pretty sweet and he doesn't just invest in "stuff" that is beaten down.

@theredlion sorry, I just don't buy it.

thank you guys for your suggestions!

Hi,

I like your investment style, its different from what you normally see. I have a few opinions I would like to share.
I have studied Economics for most part of my career, however I am a newbie trader.

I think that if you want to invest in a country because of its value (intrinsic or otherwise) investing in its currency might not be your best option. There are a number of reasons for this, the least of which being high transaction and holding costs as well as unnecessary risk exposure to macro-economic shocks.
Determine the time-frame of your investment, but as a guideline if you want to really make money investing (and not speculating) then you should look at a minimum time-frame of 2 years to get decent returns (the longer you're willing to go the higher your chances of returns as well as your risk)

Intrinsic value is determined by things you can't really put a value to, for example, it is a fairly easy task to calculate the value of Saudi Arabia's oil reserves based on the price of oil today, however it is a whole different ball game when attempting to calculate the potential value of India's growing population, most of which are investing heavily in education.

Look at emerging markets, South Sudan is a relatively new country that is attracting massive foreign inflows, especially in the retail market. Countries like India, South Africa and South Korea too are growing at exponential rates. You will need to do a significant amount of research, but the best way to organize (and perhaps hedge your investment) would be to invest in a number of countries which have potential, but in different sectors. For example, Brazil is transitioning into a developed country, so you could look into investing in Brazil in the hopes of it becoming a fully developed country in the next 5 years, but you could also invest in South Sudan, betting on the fact that its infant industries will increase growth too.
Instead of stocks and currencies look at investing into these countries' debt (bonds, treasury bills) These will ensure you get a fixed return on your investment (helping you to easily forecast your future earnings) as well as giving you the hope of making greater returns if the country in question does well (hence giving you a profit when you sell the bonds) It will also allow minimum risk exposure as bonds are way safer than individual stocks.

This is a very good thread, where we can discuss our opinions on long-term investment strategies outside our borders, do keep it alive, and I sincerely hope that people will participate.

Cheers
Abi