A key part of being a successful active investor is your ability to unearth investment ideas that will generate alpha: excess return you earn beyond the market index. If you’re unable to generate alpha over the long term, then you’re better off simply investing in the overall market!

But apart from the occasional stock idea you receive from financial sites or the flavour-of-the-month that’s constantly name-dropped in the news, how do you go about finding ideas that will earn you alpha? In this article, I’d like to present a structured framework you can use to find potentially high-growth investment ideas:

We start our approach at the highest level – studying trends of the global economy. This involves studying various macroeconomic factors such as GDP, analysing geopolitical tensions, and forming an overall picture of economic trends.