How To Become An Effective Stock Picker

The Macro Institute's Weekly Economic Primer

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The Macro Institute
March 23, 2026

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Don’t have time to watch the whole video? Here’s 5 Key Takeaways:

🔹 Effective Stock Pickers Are Macro Aware: Macro forces have explained nearly 75% of long-term equity returns. Effective stock pickers understand the relationship between macro indicators and investment factors.

🔹 Effective Stock Pickers Utilize Valuation: Utilizing a screen to identify companies with attractive valuations, in combination with other good and average factors, improves a stock picker’s expected outperformance.

🔹 Effective Stock Pickers Use Valuation Properly: Valuation works when used correctly. Valuation works when companies are compared to their peers, but loses its effectiveness when used to compare a company’s valuation to its own history.

🔹 Effective Stock Pickers Incorporate Quality: Companies who report high quality earnings and utilize conservative accounting practices tend to outperform companies who don’t regardless of their valuation.

🔹 Effective Stock Pickers Avoid Red Flags: Identifying and avoiding portfolio torpedoes is just as important for stock pickers as finding the best companies to invest in. This has been especially true since the global financial crisis.

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The Macro Week Ahead

📆 Last Week’s Data Key Takeaways

🔹 Inflation Ran Hot Again Ahead of the Fed: February PPI rose +0.6% M/M and +3.4% Y/Y, the highest since February 2025. Core PPI rose to +3.9% Y/Y, the highest since February 2023. The data landed hours before the FOMC decision and reinforced the pipeline inflation narrative, but does not reflect the oil shock.

🔹 FOMC Held Rates & Raised Inflation Forecasts: The Fed held rates at 3.50%–3.75% as expected. Updated projections raised 2026 PCE and core PCE forecasts to 2.7% (from 2.5% in December). GDP growth forecast nudged up to 2.4%. The dot plot still shows one cut this year, but seven of 19 participants now see no cuts at all (up from six in December).

🔹 Mixed Picture From Regional PMIs: The Empire State index fell to -0.2 in March (vs +3.2 forecast), slipping back into contraction from +7.1 in February. The Philly Fed told a much stronger story, surging to 18.1 (vs 10.0 forecast), a six-month high. Shipments exploded to 22.2 from 0.3, the highest since January 2025.

🔹 Homebuilder Confidence Edged Up & New Home Sales Cratered: The NAHB ticked up to 38 in March (vs 37 forecast), its 23rd consecutive month below 50. New home sales plunged to 587K in January (vs 720K forecast), -17.6% from December and the lowest since early 2023. Median price fell to $400.5K, -6.8% Y/Y.

🔹 Initial Claims Dropped To A Two-Month Low: Initial claims fell 8,000 to 205,000 (vs 215K forecast), the lowest since January and well below stress levels. Continuing claims rose slightly to 1.857M. Federal employee claims ticked up to 643. The data reinforces the "low-hire, low-fire" pattern, as layoffs remain subdued even as payroll growth has stalled.

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