why so little macro on the due diligence for equity research?Subscribe
the title is pretty straightforward. I am wondering why such little attention is devoted to the classic "bigger picture", aka macroeconomics on a regional / zone / global scale as opposed to the in depth diligence on all the things relating to the industry (sector demand/supply, competitive dynamics, players, business model, etc). please note that:
- I by no means think that the latter is less important, it's a vital component to a make-it-or-break it approach to stock picking
- I by no means think that macro is easy (in a 3 months + optics) to understand, predict, gauge in a rsk management perspective
- I by no means think that weighing the chances of the stuff that has to happen at micro and macro level is nothing less than very tough
but, looking at the markets, at how stocks behaved, at how they reacted when stuff happened, I couldn't help but notice that a great variety of great fundamental thesis (not mine, but I was sold on the idea) backed up by very smart, extensive and diligently done due diligence proved to be total disasters even in a year horizon (taking into account longer time horizons for value plays to play out) all due because the macro picture materially changed (or it revelead itself for what it was).
in essence, why, most of the time, macro is overlooked (or at least it's what looks like to inexperienced readers like the undersigned here) or implicit hypothesis are not included in the modeling / reasoning ?
after all, even in dispersed sectors where competitive positioning excercises a much greater influence in dividing winners and losers (unless it's stretching an underlying macro thing to the limit, so there's compression on the way down) , a very significant part of the value drivers is strongly correlated with macro variables...
can somebody shed some light on the matter to this very much in the dark 'monkey'?