Micro and macro economic factors affecting Investment

Macro economics factors is the field of economics that studies the behavior of economy as a whole and not on just specific companies , but entire industries and economies.

Micro economic factors closely integrated to the company performance. It is the study of decisions that people and businesses make regarding the allocation of resources and prices of goods and services. This means also taking into account taxes and regulations created by governments. Microeconomics focuses on supply and demand and other forces that determine the price levels seen in the economy. For example, microeconomics would look at how a specific company could maximize it's production and capacity so it could lower prices.

An investor should have well awareness about the performance of the company. Micro economics tightly connect with the product, cost and demand in the market, that should affect the company  and profit to a great extend. Company sales growth, cost of sales, capital allocation, debt increase or decrease, market monopoly all covering under micro economic.

As a value investor, keep avoiding the macro economic factors because it does have nothing to do for us. Keep an eye on such events to get best business in a best price. It is clearly a temporary behavior and would change back to normal. 

 

Any changes in micro economic factors affect to the root of a company and its performance. As a value investor, it is advisable to keep track on a company on the basis of influential micro economic factors like what legend investor Warren Buffet does.