by Jason Voss, CFA

As a former portfolio manager, I know that practitioners often pay too much attention to micro-level issues of individual securities and not enough attention to the broader macro-level context. Investors often reach for a microscope when they should be using a telescope. The consequences of this narrow focus can be disastrous, as the sovereign debt crises in the U.S. and Europe have amply demonstrated.

Paul McCulley, a former senior partner at bond fund giant PIMCO, has a novel framework for bringing the macro context into focus. At the CFA Institute 2011 Fixed-Income Management Conference in Boston this past fall, McCulley – who now chairs the Society of Fellows for the Global Interdependence Center, a nonprofit think tank based in Philadelphia – argued compellingly and convincingly that the broader global context is governed by the interoperability of three key structures: democracy, capitalism and sovereignty.

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