Geopolitical Alpha begins with a simple premise: “Preferences are optional and subject to constraints, whereas constraints are neither optional nor subject to preferences.” This fundamental asymmetry leads to the main idea of the book: If you wish to forecast geopolitical trends do not focus on what policymakers want to do but rather what they can actually do.
Elegant as this framework might be, the devil is in the details. The value of the book not only comes from the framework itself but from its application to real world scenarios. Marko shows through numerous case studies how to use his constraint framework - as well the insights of political science like game theory and the median voter theorem - to forecast geopolitical trends. Moreover, he gets down to the nitty-gritty: when should political experts be (or not be) trusted, how voters preferences and economic and financial conditions determine policy maker actions, how in certain scenarios the constraint framework might fail in producing an accurate forecast.
And yet, what makes this book unique in the genre is that it goes one step further. Whereas a political strategist will stop at making predictions, Marko understand from his experience in the investment world that this is not enough. Success in markets is not making the right forecast, but actually making money from your predictions. With this in mind, he adapts his geopolitical framework to the realities of the market, making it a much more useful book for investors who wish to apply his insights when managing their portfolios.
Finally, the book is both personal and wonderfully written, peppered with wit, history and hilarious anecdotes. Overall, if you wish to gain an understanding of how to predict geopolitical trends and how to use these forecast to make money in financial markets, I would definitely recommend this book.