Investments and Finance: Interconnection Essay

Investments and news are the two subjects that have direct relation to finance domain. In this essay I will characterize Niall Ferguson’s article named: “Investors are often the first casualties of war,” published by Bloomberg on 22 February 2022 (Ferguson, 2022). I will describe the main essence of finance through the correct information perception and how this concept applies to the actual world realities.

The author of this article is a professional historian chronicling the economic history of various countries and empires. In this personal article, Ferguson asks why investors are the most informed people during periods of war. Demonstrating that during pre-war sentiment, market dynamics are driven only by the development of political trends, the author proves that the general economic information background does not always rule the market. By analyzing the historical success of the Rothschild family in effective information management, the author shows that in today’s realities, it is quite difficult to own systemically significant information exclusively. However, the skillful use of data and confidence is still a major component of success in wartime investing, where political developments drive prices. With this in mind, I like the topic of historical analysis of economic processes and extrapolating the results of the analysis over some time to reconcile results in the future. By using the economic-historical approach, a person who is aware of the cyclical nature of history and economics can accurately predict the course of events, which gives an extraordinary advantage in investing and finance.

In fact, the historical analysis of economic events is a direct complement to the field of finance. Since the majority of all financial models are based on information about global markets, it is important for everyone involved in finance to understand the importance of correct information in building financial models. Since the main objective of finance is to determine the most profitable investments in the future, locating the right data allows the analyst to base his or her analysis on the correct sources, which are important but cannot be accurately measured.

Reference

Ferguson, N. (2022). Investors are often the first casualties of war. Bloomberg.