Ask HN: What are you reading to make sense of the economy?

P/E ratio is only meaningful for companies with little or no revenue growth. For companies with very strong revenue growth, like Amazon, revenue growth is financed with earnings, which creates a misleadingly high P/E ratio. Investors know this. For these companies, it is more useful to look at metrics like market cap/revenue to determine if they are overpriced, which at 3-4x for Amazon is in a very healthy range. Simple metrics like P/E ratio tell you little about the health of a company when taken out of context; a low P/E ratio is often a sign of a failing company.

As more of the largest companies in the market exhibit strong revenue growth, it drives the P/E ratio of the broader market higher without implying anything about the underlying equities.

>>"Some other countries [the exception not the rule] have been more prudent with their finances"

I'm going to dispute that this have something to do with "prudence".

If an economy grows (bigger GDP), that means that more money is spent in the economy. That money have to come from somewhere otherwise there will be not grow (1).

New Zealand have a positive commercial balance, that's where the money is coming from. Obviously, not all the countries can be net exporters at the same time.

If the USA government were running a surplus instead of a deficit, they will not be being more prudent, but less. Running that surplus would mean that the GDP doesn't grow or that the private debt increase (after all, money has to come from somewhere). Private debt is a lot more dangerous that public debt.

On the other hand, if New Zealand government, with a positive commercial balance, has an economy a full utilization (I don't know if that is the case) and run a deficit, they will create inflationary pressures on the economy.

(1) - http://bilbo.economicoutlook.net/blog/?p=21287

I think the economist is great in how broad the coverage is, it's a great way to keep up with what's happening around the world. But it tends to have a very ideologically driven narrative, I think of it as basically neoliberal propaganda, so I always read it with a hefty helping of salt.

Ray Dalio : https://www.youtube.com/watch?v=yrxYhv2O3wU

After reading through the comments, I'd like to approach from a different angle.

Summary: you better of learning more about human behavior, and how we operate on a daily basis then reading every book on economy.

When I heard in 2008 as a kid, that the world is in a financial crisis because the investors are scared, I had no idea what is going in. I was like, those people are grown man, how come they fear something they do all the time? And why does investors mood correlates to financials? How can a grown man have a fear of investing as an investor, it was odd at a time for me. Then I went ahead and played outside like nothing is happening.

I've read a lot of books just about everything, like on every topics i could get my hands on. Some of em are: Thinking, Fast and Slow, The power of habbit, Deep Simplicity, Intelligent Investor and much more, not exclusively from hackernewsbooks.com.[0]

I always arrived at the conclusion of the market is eventually run by people(no shit). At some point in time people come up with the idea of having a stock exchange or whatever you want to call it. Without people it would be non-functional, non-existent. So if you want to know about the working of market, you better of reading about humans, human mind. What drives us, why we do things, fears, and so much more. And the best thing about this is that you can see for yourself, it feels I am doing a research, but on myself. There is not a single silver bullet in this topics of course, but one book I most often hear is Thinking, Fast and Slow, mentioned before, its really worth to read it!

Sometimes its driven by fear, like right now. In 2008 it was greed (yeah its usually not just one thing, but you get the idea). So at the why and how, I usually end up with human behavior. And since you cant determine what someone is going to do, feel or think, you cant really tell what is going to happened next, or in the future. But after reading more and more about humans, it gets a little bit clearer as you read more books and connect the dots. And you are going to experience everything for yourself. You can be your own research subject. The past couple of years I've been doing that and I really enjoying it.

[0]: https://hackernewsbooks.com/book/thinking-fast-and-slow/8e66...