5 comments about Unexpected Returns: Understanding Secular Stock Market Cycles.

1. If you have been questioning when the secular bear we've been in for the last 10 years is going to end then this book is for you. Using charts and diagrams Easterling does a masterful job of explaining how to determine secular bulls and bears and get's to the heart of why it's so important to avoid losses. This is a must read for every investor, institutional and individual.



2. Unxpected Returns is a modern investor must read. Investing in a secular bear market requires much more knowledge than the "buy and hold" strategy of the 80's and 90's. If you desire the type of returns needed to accumulate wealth and retire secure you need to understand the concepts in Unexpected Returns.



3. This work must be read in conjunction with the crestmont research website which provides updates to the charts illustrated in the book. A great analysis on investing in bear markets. These stratigies coupled with absolute return investing should be part of many portfolios in these challanging economic times. If this book was revised to reflect current market conditions it could be one of the most important works on investment. Michael J Gorman JD,CPA,CHfC



4. Everyone should be giving this as a gift because most everyone has no idea the realities of investing. If everyone mindlessly throws money into the market, statistically, this is abnormal and "The Wolves Have Access To The Pocketbooks Of The Sheep".



5. As an MBA, I always assumed that markets give a fixed return (as we average the returns over a period). I never thought about volatility and economic conditions explicitly. I used to hate volatility as it makes the world uncertain. After reading this book I am embracing volatility and realized that you can make unexpected returns because of the volatility. I used some the techniques I learned in MBA (@Risk, Solver) to come up with financial models and PROBABILITY of returns.
   
   Simply I can not put it down.

4 comments about Equity Asset Valuation (CFA Institute Investment Series).

1. I teach Investment Analysis & Portfolio Management to undergraduate Finance majors and have found this book to be very effective in teaching equity valuation models from a fundamental analysis standpoint. There are many specific valuation examples used throughout the book making it very useful for Finance students learning how to implement intrinsic stock valuation. Although the concepts are considered intermediate-level Finance topics, the language of the authors is easy to understand and not too difficult to grasp.



2. This book is the same book with a different name. The first edition was called "Analysis of Equity Investment Valuation." After reviewing the table of contents as well as several chapters, I have the following to report: The Table of Contents is the same; and the rest of the book is the same, too. The pages don't exactly match because in the new book the block paragraph style has been chosen.
   
   You do not need this book for the CFA. If you call the Institute, they will tell you not to purchase the source books because the program has been tailored specifically for the candidates. Instead, the Institute mandates that you buy the "program".
   
   If you really want the book, then buy the old version for a fraction of the cost. The content is the same.



3. This was one of the better finance books I've come across and a definite keeper for reference. Instead of mindless rambling or chocked full of jargon, the material was concise yet contained enough detail to cover all aspects of equity valuation that one might need to know suitable for the CFA Level II prep. But even for laypeople who have no intention of taking the CFA, this book will be very easily understandable with just a rudimentary background in basic finance theory.
   
   The layout is very logical, basically covering the four important aspects of equity valuation: DDM, Free cash flow models, price multiples, and residual income. Under each of these, the reading builds up to form a bigger picture of what needs to be understood. Examples are very clear and do not rely on specific methods of solving, such as being only relegated to math equations, spreadsheets, or financial calculators. You basically can approach any of the problems in whatever way you want. The emphasis is on understanding rather than route "do it my way" methods. The book appears to have been very well proofread, so you don't find numerical errors that can make you pull your hair out as with other books.
   
   There is also a workbook for this series but at my time of writing, it has yet to be released. When it is out, I would give this book series six stars in strength.



4. It is an extremely important reference book because I am preparing for CFA Level II exam. I've found the book an introductory one to illustrate basic concept in investment industry. Any one who wants to enter the investment banks,mutual funds,asset manangement corps. should have this book in hand.
   
   I strongly recommend it to all candidates on the road to getting CFA charter, and other partitioners in investment field may also find it helpful.

5 comments about The Elements of Investing.

1. This book gives good advice for anyone thinking about how to manage their money and does it in concise fashion that delivers upon the promise the authors lay out in the beginning -- that it will only take a couple hours to read. It's not inaccessible at all and gives advice of which nearly anyone could--and should--take advantage. And it's helpful as it explains why it's good advice, contrary to what else one might hear. The only thing they could have done better was take out some of the repetition to make it even more concise, but it's clear why they did it as they did, and it works well.



2. I have been looking for a book to share the overall basics to financial management. Being and investor for nearly 45 years, I have learned much. I have been asked by younger relatives what steps to take in investing. Since every situation is different, it is difficult to give good advice in a conversation when even the basics of financial management cannot be assumed. This book not only explains the basics in a real person's terms in dealing with paycheck options, banks, etc. but it also lays out a basic financial strategy for the person that does not want to make this a daily, weekly, or monthly routine. It starts out with debunking that a person can invest if they do not first have savings and zero balances on revolving credit. The step by step process up to investing, then basic investments that work over time, followed by yearly maintenance (reread the book annually) makes this a timeless tool. It takes only 2 hours to read. I bought 7 books for my nephews and neices. It just may inspire financial freedom!



3. I'm just getting started in investing and was looking for a good overview, which this definitely is. Lays out a nice clear path to what should be solid and conservative plan for investment. Quick read on concise, awesome for consumption on an iPad.
   
   The one complaint I have is with the index in the iPad version. There's a terms list but no links to pages. Just seems to be a quirk in this form of the media. The book itself was fantastic however.



4. The Elements of Investing is, as advertised, a nice primer for young adults who want to know a little something about how money and investing works. The actual writing style is quite boring, and not geared for young adults or those new to investing (their target audience) but for those well versed in financial literature--so this mismatch in style makes the book much less valuable. The five key principles outlined in the book (save, index, diversify, avoid blunders, keep it simple) offer good advice, but again, it's simply a collection of common knowledge for those who read these kinds of books, and perhaps too general for those who don't. Also, Malkiel and Ellis write knowledgeably about the investment vehicles they are most familiar with (stocks and bonds) but don't make any effort to address other investment vehicles (real estate, small business ownership, etc.).



5. The Elements of Investing is an ingenious little book for its simplicity while covering the basics of investing and teaching people how to make healthy choices for their financial future.
   
   This book is perfectly named in honor of the book The Elements of Style by Strunk and White, whose goal was to make the many rules of writing simple and has published it's 50th edition.
   
   Malkiel and Ellis have done the same, having taken the complex for personal investment planning and made it simple for everyday people to succeed, no matter how much money they make. I wouldn't be surprised if a 50th edition is published of this book in 2060.
   
   This book is worth buying and would make a great present.

5 comments about Dictionary of Finance and Investment Terms.

1. This "Barron's Guides" series of dictionaries is an indispensable and inexpensive toolkit of professional terms of art across many fields. While not infallible nor inexhaustibly complete they are convenient to use (as opposed to the heft of, let's say, Black's Law Dictionary: Deluxe Ninth Edition. And if you work with professional terms in medicine, real estate, finance, and the like but are not a specialist in those fields, these books will get you through a jungle of jargon intelligently and with confidence.



2. This is a great reference book if interested in the subject matter of common stock investing.



3. My favorite dictionaries are made by OXFord. But this is a great resource for finding information you need. One of my favorite text books. Money & Banking. It describes a sector. The back bone of todays economy. Both Domestic and International.



4. As a financial adviser, I've found myself turning to this as a reference for over 15 years.



5. I am currently taking managerial finance and this book is a great source for all the different meanings that you will find in different sources.

5 comments about Understanding Options.

1. Lately I have been thinking about the possibility of options. After I Toni Turner's (A Beginner's Guide to Day Trading Online (2nd edition)) positive words on the back cover, I put Sincere's book in my cart and ordered it once my cart reach the minimum for free shipping. The book doesn't necessarily disappoint but I wish it was longer and went into a good deal more detail. I understand the need to limit the scope of a beginner's book but I still think it lacks depth.
   
   Concerning Sincere's style, I like how he refuses to preach to the reader in absolutes. On the one hand, I believe it allows the reader to keep an open mind which is vital when you are learning a new skill. However, the glaring downside of this practice is that the reader needs to find his (or her) own direction. That is great in the Zen sense, but financially, most audiences aren't looking to be trailblazers initially. They are looking to minimize trader's tuition and find a successful sense of direction that they can personalize and make more efficient as they progress.
   
   To me, the author comes across like a parent who aims to be more like your friend. The book reads easily and effortlessly, at the cost of learning more detailed, pertinent information. I do not mean that the author cuts corners necessarily, more that he doesn't offer potential tricks of the trade, insights after years of experience or mistakes that newbies fall victim to time and time again.
   
   Because of that, the book is educational but there is no chance of having a systematic approach if this is the only book at your disposal. The book explains buying puts, buying calls, selling puts and selling calls in four respective chapters. It is impossible to get any of them confused, but it definitely gets repetitive and almost patronizing every time he tells you:
   
   - Step 1: Turn on calculator
   - Step 2: 3.30 premium x 100 shares
   - Equals $330 profit on a sold covered call.
   
   I am far from a genius but even I don't think I need to be told to turn on a calculator or even use one at all when it comes multiplying any number by 100. Maybe it was the fact that I was reading the book well beyond my bed time but also by the fourth time he reminded me that 1 contract is equivalent to 100 shares so don't type in 100 contracts, I was rolling my eyes.
   
   With that said, I have a better foundational knowledge of the absolute basics of options understand the basics of options now. It is definitely worth a read, but looking back, I could have gotten this book from the local library instead of purchasing it. I doubt i will refer to it for anything once I start reading the next book on options



2. At the time of purchasing this book, I had about 1 year's experience trading stock. My understanding of options was fairly limited, and I was looking for a book that would lay out the basics, and provide me with the foundations for trading option contracts. I was very pleased with this book and its pedigogical approach. A richer understand of options however, this book does not provide. Perfect if you have little to no experienced with options, perhaps not so recommended if you consider yourself intermediate on the topic. Otherwise, an excellent buy for the price.



3. Reading this book allowed me to get started in options trading. I read a few more as I got more into it. He explains options in terms that are very easy to understand. He explained necessary analysis necessary before picking an option and option strategy. It was easy to turn that into spreadsheets you can use to analyze your plays.



4. Several reviewers have mentioned that this book is too narrow and simple on the techniques described, but I believe they miss the point of the book when it's aimed at people who are new to options. This book offers a quick read and out of several beginner options books out there, I would pick this as the first to get started. I have to stress that this book is for beginners - meaning people who don't know what options are and wants to gain a better understanding in a language that is easy to understand. The author takes a friendly approach in using real life examples for explaining how options work, and I think for the visual learners out there, this teaching style would be very helpful. After that, the author goes into the four most common techniques in trading options and simply gets the reader's feet wet. This is perfectly fine since it's a book that offers a stepping stone to what's out there and it's accomplished that successfully.



5. This book is great for beginners. Michael explains all aspects of option trading in words and examples that are easy to understand. This is a great place to start if you think you might want to trade options.

5 comments about Beating the Street.

1. Peter Lynch, once manager of Fidelity Magellan, compiled one of the most amazing track records in the history of investing. Lynch took the reigns at Magellan in May of 1977, when the Dow was at 899 - and headed to 801. He left in May 1990. If you had put $10,000 with Lynch in 1977 and just left it there, you would have had over $250,000 when Lynch retired in 1990. That's an average annual return of 29.2%.
   
   Among his favorite stocks were S&Ls. At one point, he owned over 150 of them. As he writes in his book Beating the Street, "Once, I confessed to the Barron's panel that I'd invested in 135 of the 145 thrifts whose prospectuses landed on my desk. The response from Alan Abelson [Barron's editor, long known for his wit] was typical: `What happened to the others?'"
   
   Lynch had his own schema for separating S&Ls. He had the "bad guys," who perpetuated the fraud. Most of the frauds, Lynch notes, were privately owned (Charles Keating's Lincoln Savings and Loan being an exception) and would not have survived the scrutiny of being a public company. Then there were the "greedy guys," who couldn't leave well enough alone. In their thirst for greater profits, they followed the old hackneyed measure of borrowing as much as they could and putting it to work in risky ventures.
   
   Lynch loved these S&Ls. As he explains it, he bought them in such large quantities because they were often small and Magellan was so large, such that "to get nourishment out of them, I had to consume large quantities, like the whales that are forced to survive on plankton." One reason he loved them was the unique way in which they go public.
   
   Review from Agora Financial, publisher of economic and financial analysis including Financial Reckoning Day Fallout: Surviving Today's Global Depression, The New Empire of Debt: The Rise and Fall of an Epic Financial Bubble, and I.O.U.S.A.: One Nation. Under Stress. In Debt.



2. unexpected 1 month of leadtime. part of it, everything OK. No evident traces of use.



3. Peter Lynch shares in his experience how to beat Wall Street in this book. Warren Buffett invite him to Omaha, NE. If Peter Lynch commented Ben Graham's The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition), he would have done a much better job than Jason Zweig



4. Peter Lynch says it best - "In stocks as in romance, ease of divorce is not a sound basis for commitment. If you've chosen wisely to begin with, you won't want a divorce. And if you haven't, you're in a mess no matter what. All the liquidity in the world isn't going to save you from pain, suffering, and probably a loss of money." Value investing does work. Combining this strategy with a high growth strategy you are able to invest in fast money stocks while keeping your risk relatively low, and that is ultimately the key.



5. This book, even though written in the 1980s, still applies today. Great for beginners since Lynch is very easy to read.

5 comments about Devil Take the Hindmost: A History of Financial Speculation.

1. Maybe I've read too much on this topic, but seems like nothing to new or earth-shaking here.



2. This book makes it extremely clear that the stock market is a dangerous place. The author begins with the speculator and the ethics of speculation.
   
   "Speculation is a divisive topic. Many politicians - several of them in Asia - warn that the global economy is being held hostage by speculators. In their opinion, the speculator is a parasitical figure, driven by greed and fear, who creates and thrives on financial crises ... Western economists take a radically different line. They argue that speculation is fundamentally a benign force, essential to the proper functioning of the capitalist system."
   
   In the last paragraph of the book the author gives us his conclusion on this speculative debate.
   
   "Speculation undermined the Bretton Woods system of fixed currencies and, more recently, it has destroyed the state managed capitalism of Japan and other Asian nations. As an anarchic force, speculation demands continuing government restrictions, but inevitably it will break and chains and run amok. The pendulum swings back and forth between economic liberty and constraint."
   
   That conclusion in my estimation gets a 10 on the Alan Greenspan scale of economic mumbo-jumbo. But it is standard fare from those versed in economics. After reading the book I actually understand what the author is trying to say in this self-contradictory statement. That's a little scary, in itself.
   But in truth I did not buy this book to get the author's answers to anything. I bought it to get historical information on panics, bubbles and crises. I got a good deal of information. I'm satisfied.
   
   I was actually looking for a book discussing U.S. panics beginning with colonial times and coming forward to the present. More than half this book discusses pre-colonial panics and countries other than the U.S. So I'm still in the market for something more specific and more detailed.
   
   But what about investing in the stock market? What kinds of people have been involved in this enterprise? And how should an average person look at the stock market for his personal investments.
   
   The answers for me, after reading this book are: Do not invest in the stock market. It is filled with crazies, manipulators and the clinically insane - not to mention outright gangsters and criminals. And an average person would be better off investing their life's savings in their retarded son-in-law than giving their money to a stock broker.
   
   The author takes his readers on a tour of the many famous speculative bubbles and manias of the past going back to the "Tulipomania" of 1630 and carrying us through the Japanese crisis of the 1980s. He even dabbles into present day derivatives and hedge funds. The book was published in 1999 so it predates the current fiasco. But this book makes it very clear that the historical information was there. Japan should have been an obvious example.
   
   For Alan Greenspan to state before Congress that he couldn't imagine that prominent bankers and brokers would act in such a "negligent" unprofessional manner is beyond naivete. Alan was obviously joking. It is difficult to determine when Alan Greenspan is joking.
   
   But Alan was not the criminal. He did nothing wrong. He did nothing right either. As J.K. Galbraith stated in many of his books, the Federal Reserve and its bosses did exactly what they should have done ... nothing. If they let the bubble go until it collapsed they are blamed for the collapse. If they put on the brakes and tighten up the money in the middle of a "boom" they will be blamed from killing the growth and crippling the prosperity. For us here at home the big questions are where were the inspectors, the regulatory agencies and the Congress and the Senate with the proper rules? And even bigger question ... Where was the moral conscience of all those thousands who participated in all the scamming and falsifying? We had more than an accident here. We had a moral and ethical calamity.
   
   What this book makes clear is that what has happened has happened many times before - not on such a great a scale as today. This current speculative extravaganza was a major moral earthquake.
   
   Galbraith said in his book "Money, Whence it Came, Where it Went" that the time between speculative insanities or panics is directly proportional to the time it takes for everyone to forget the last speculative bubble or panic.
   
   Galbraith also had much the same confusing type answer to the problem as offered by Mr. Chancellor.
   
   For the present, rules and regulations need to be put in place but as time goes on these rules or any rules will be undermined. There will then be another collapse and a new need for newer rules. Galbraith suggested a five year term for new rules and new regulators. Then all bureaus should be abolished and new ones established. In other words, the new rules must be kept ahead of the old rule breakers and manipulators. Keep changing the game.
   
   This answer seems to indicate that the problem is endemic to the system. So we need a new system. But is that possible? And what will it be? And will it have other flaws equal to or worse than the present system?
   
   Maybe the same system could be continued if we could just develop some better human beings.
   
   Books written by Richard Noble - The Hobo Philosopher:
   "Hobo-ing America: A Workingman's Tour of the U.S.A.."
   "A Summer with Charlie" Salisbury Beach, Lawrence YMCA
   "A Little Something: Poetry and Prose
   "Honor Thy Father and Thy Mother" Novel - Lawrence, Ma.
   "The Eastpointer" Selections from award winning column.
   "Noble Notes on Famous Folks" Humor - satire - facts.



3. Sometimes we forget how bad it can be, and then we howl over minor bad times in the markets. We may be past a mania in residential housing, but we have not really experienced a panic or crash yet. People squeal over how bad the equity market is, but recently we haven't had anything like the 2000-2002 experience, much less the 1973-1974 or 1929-1932 experience.
   
   Two books come to mind when I think about disaster in a non-fear-mongering way: Manias, Panics, and Crashes, by Charles Kindleberger, and Devil Take the Hindmost, by Edward Chancellor. They take two different approaches to the topic, and those approaches complement each othe, giving a fuller picture. Chancellor takes a historical approach, while Kindleberger deals with the structures of financial crises.
   
   From Chancellor, you will see that manias and their subsequent fallout are endemic to Western culture. Someone living a full life over the last 300+ years would see one or two big ones, and numerous small ones. Relatively free societies give people freedom to make mistakes. Given the way that people chase performance, we can all make mistakes as a group, with large booms and busts. Much as the regulators might want to tame it, they can pretty much only affect what kind of crisis we get, and not whether we get one. He is somewhat prescient in suggesting that the leverage inherent in derivatives post-LTCM could be the next crisis. This book is a better one if you like the stories, and don't want to dig into the theories.
   
   But if you like trying to place the manias, panics, and crashes on a common grid, to see their similarities, Kindleberger has written the book for you. In it he draws on a number of common factors:
   
   * Loose monetary policy
   * People chase the performance of the speculative asset
   * Speculators make fixed commitments buying the speculative asset
   * The speculative asset's price gets bid up to the point where it costs money to hold the positions
   * A shock hits the system, a default occurs, or monetary policy starts contracting
   * The system unwinds, and the price of the speculative asset falls leading to
   * Insolvencies with those that borrowed to finance the assets
   * A lender of last resort appears to end the cycle
   
   I liked them both, but I am an economic history buff, and a bit of a wonk. The benefit of both books is that they will make you more aware of how financial crises come to be, and what the qualitative signs tend to manifest during the boom and bust phases of the overall speculation cycle.



4. I highly recommend this book to anyone trying to make sense of the economic crashes of the past couple of years. "Devil Take the Hindmost" is a well written history of financial bubbles--how they develop and how they collapse. I wish I had read it two years ago.



5. 
   I have been a client adviser in speculative/growth investments for 11 years and have recommended that all my clients purchase this book. Along with Peter Lynch's One Up on Wall Street, and my yet to be written second book I believe that these three are all you need to provide the platform for success in speculation. It is amazing how those tied up in textile, shipping and mining companies in the 1600's would not look at out of place in some of the bars/eateries in Perth. No doubt hairstyles would have changed but I can just imagine the rubbish flying back and forth way back then. This book illustrates clearly and with considerable passion how human stupidity is infinite and "Fear is temporary and greed is perpetual".
   I could not imagine Australians willing to pay 1200x earnings for Qantas or Virgin Blue or insane amounts to join a rundown public golf course. It shows that bubbles can show up anywhere and although the great Nasdaq bubble came after the book was written the same rules apply. This book will help us prepare for the bubble in Australia considering we were the first to lift rates, and we had that Hey Hey Its Saturday skit which earnt the country considerable publicity.
   When times get tough i.e when you should be buying stocks low this book brings it all together and I cannot recommend it strongly enough. No need for black boxes, flux capacitors or $5,000 seminar courses, this book nails it in an easy to read and enjoyable manner! Buy low, buy quality, buy lots and sell high it never changes!
   
   Tony Locantro
   Perth WA

5 comments about Bond Markets, Analysis, and Strategies (7th Edition).

1. Some sections of the book were underlined throughout the page. If everything is underlined, nothing is important.



2. I agree with Veritas in that this text and its accompanying solution manual are plagued by errors.
   
   The text, in its examples, has errors throughout the text which makes learning this material extremely difficult.
   
   For example, on page 65, Exhibit 4-5, the answers given read as "Macaulay duration (half years)", "Macaulay duration (in years)" and "Macaulay duration". The last "Macaulay duration" should read Modified duration. On page 68, an equation reads "210.62(+0.02) = - 0.2124 = -21.24%". Do the math here folks! This should read, "-10.62(+0.02) = -0.2124 = -21.24%.
   
   Every chapter that I have read has errors. I am currently working on Chapter 18 and the examples given calculate the forward rates incorrectly. Page 425 has a 3-year forward rate of 5.58%, It should be 5.611.
   
   I guess someone could say, "You're being anal here. What's the difference between 5.58% and 5.611%?"
   
   The Author, publisher and editor should be ashamed of themselves.
   
   Keep in mind folks, this is a SEVENTH EDITION!
   
   I couldn't find any errata available on the publishers site either.
   
   I realized students don't have any say in what text is assigned in class, so you're stuck if this is the case.
   At least, I've warned students that there are more mistakes in this text than a speech by Vice President Joe Biden.



3. The seller was in touch with me throughout the entire process but I didn't receive a student edition of the book like I thought I bought instead I received a professional edition which wasn't written on the description of the book. However they did refund me some money for this mix up.



4. 
   
   Excellent treatment of all the major concepts -- good if you are studying for the CFA exam, as well...we used this in a top 20 MBA program and I highly recommend this book...fixed income is not easy stuff, but this book explains concepts/problems in a easy to digest way....



5. This book has numerous issues with incomplete formulas, math errors, and poor editing. Many of the questions at the end of the chapters are incomplete and the solutions in the manual often add in information that was not in the question. The solutions manual has lots of numbers transposed and on multipart questions these errors cause all of the answers to be incorrect. In addition, many of the solutions will change par value in the middle of the answer making it very confusing.
   
   The editor of this book should be fired immediately.

5 comments about F Wall Street: Joe Ponzio's No-Nonsense Approach to Value Investing For the Rest of Us.

1. This book has changed my whole approach toward managing my own investment portfolio. The author knows how to present information for this complicated subject in a easy to read fashion. I've recommended it to several friends and family members.
   
   Grace and Peace,
   Jerry



2. I've read quite a few books on investing and I honestly have to say that this book really put value investing into perspective for me. It provides a truly intuitive approach to investing and doesn't bog you down with fancy technical terms. Joe Ponzio does a great job of breaking down the concepts and simplifying the investing process. I also found it to be an entertaining read and was able to finish it in one sitting. I highly recommend this book for any investor.



3. This is a great book for new and veteran investors. It breaks everything down to where it makes sense. The cash flow technique is really helpful and is done in detail. The author does it in a way that it doesn't limit it to just his method but allows you to understand the principals behind it so you can apply it your own way. It belongs with the other investing books you should get such as One up Wall Street by Peter Lynch, Common Stock and Uncommon Profits by Philip Fisher, The Intelligent Investor by Benjamin Graham. These books get to the root and prinicpal of what investing should be and leaves room for the reader to use it how they should apply it. The book is a great foundation for new investors and helps you understand the method of legendary investor Warren Buffet. Anyone who picks this book up will surely learn something useful one way or another.



4. This not only makes money, it is "safe" (caution that word has many meanings). It is a simple theory. Buy low, sell high. But it's not a guessing game, this could mean buy at 50 and sell at 40. Or buy at 40 and hold at 50. Or buy and hold. Or buy at 50 sell at 90. How do you know?
   
   Why the disconnect? It's all about value. If a company is undervalued at 50 and some fundamental change happens that causes the value to drop, it's simple -- you sell. This stops you from losing money.
   
   In most cases the reverse will be true, you will learn how to value the company and know when to buy more, sell, or hold based on the value of the company. No more guessing games.
   
   I follow a lot of value investors that I respect for their analysis. The one thing I found in common with almost all of them -- they list this book as a major influence on their thinking. This is Buffett/Graham explained in methods and evaluation so a non-accountant can understand it.



5. This should be a must read for anyone who wants to invest in stock by themselves. Joe goes through step by step process of analysis and investing in stocks.

5 comments about Irrational Exuberance.

1. I've always enjoyed articles by Yale economist Robert Shiller, so I had high hopes for "Irrational Exuberance", not least because it has been talked up in every financial journal, web site, or newsletter that I read. I was disappointed. "Irrational Exuberance", borrowing a phrase from then-Fed Chairman Alan Greenspan, attempts to explain the psychological bases of speculative bubbles. The first edition addressed the millennium tech stock bubble and was published just months before it burst in 2000. This second edition has added a chapter on the housing bubble of the mid-2000s and incorporates commentary on residential real estate bubbles in some other chapters as well. It was published in 2005, also shortly before that bubble burst.
   
   Shiller begins with brief chapters on historical stock market and real estate bubbles, to give the reader some perspective and demonstrate why these were, indeed, bubbles. He then names 12 factors that he believes precipitated the stock boom of the 1990s that culminated in a bubble: global capitalist explosion and the "ownership society", cultural and political change favoring business success, new information technology, supportive monetary policy and the Greenspan Put, Baby Boom and Baby Bust, expansion in reporting of business news, analysts' optimistic forecasts, expansion of defined contribution pension plans, growth of mutual funds, decline of inflation, expansion of the volume of trade, rise of gambling opportunities.
   
   "Irrational Exuberance" analyzes the psychological factors behind bubbles, those that are not rational or due to economic fundamentals. Shiller discusses feedback theories of markets, the role of the media, examines the potential role of big news stories (which he concludes are not an important factor), the concept of "new era thinking" that preceded the 4 major stock market peaks of the 20th century, and speculates on why people are deceived by bubbles, which he terms "naturally occurring Ponzi processes". He references a lot of psychological studies that demonstrate people's overconfidence in their own judgments -and others that demonstrate that people will believe the majority view or expert view even if it strikes them as wrong.
   
   There is not a lot of economics in "Irrational Exuberance". It's about psychology. Shiller has distributed a lot of questionnaires and analyzed a lot of data over the past few decades in attempts to understand the psychology of markets. But he often cites surveys of the public at large, most of whom do not directly participate in the stock market, when talking about market behavior. And he cites a lot of psychological studies that draw dubious conclusions. He quotes a Barron's survey from April 1999 in which 72% of respondents believed that stock market was overpriced. This would indicate that the problem is not that people are fooled by bubbles, but that some flaw in management discourages them from acting on their understanding. Shiller doesn't have much to say beyond the obvious, which he stretches to 230 pages by doing things like discussing epidemic models after he has just stated that they can't be applied to the spread of ideas.



2. The author first mentioned the twelve precipitating factors
   for a bubble. Precipitating factors like capitalism explosion
   and ownership society, new information technology, supportive
   governmental monetary policies and analysts' optimistic forcast.
   
   This ultimately resulted in a feedback loop which amplified
   the 'story' behind the stock or even in a painting like Mona
   Lisa. If a stock or any investment had a strong credible story
   behind it, the story greatly enhanced the value of the investment.
   
   How was this possible? It was through the channels of the media
   and word-of-mouth. Word-of-mouth was cited to be more potent
   though less accurate. The analogy of how ants communicate and
   how epidermics spread was used to desbribe how bubbles formed.
   
   "New-era thinking' was another reason bubbles formed. The advent
   of automobiles and radio in the '20s; the television in the '50s;
   and the internet in the '90s.
   
   The book is well structured and support material is sufficient
   to prove its point. One gripe is the complex and cumbersome
   sentence syntax used. Commas were missing where they could be
   inserted to make reading easier.



3. this is a very good book from an economist who has a balanced view on social and behavioral economics.
   He is one of the very few grounded economist that i know of.



4. When I obtained this book, I figured it had information about both investments and the economy. Like any other book of this type, I always ask, "How can I be a better investor or what new information can I learn about the economy". The book cover explained the book would be about bubbles such as the real estate and housing bubble.
   
   Unfortunately, I was seriously disappointed in a book written by a Yale University professor. In the beginning and throughout the book, Mr. Shiller explains more about surveys that he did. In one case, he was very proud of the way he did his survey. Apparantly, he can ask the right question to get the right answer. I could never figure out how useful these surveys were but they seem to make good fillers for a book.
   
   The book become briefly interesting around page 100. Yes! Page 100. At this time he introduces unlikely investors in previous bubbles such as hotel waiters, etc. This is a good point since my own experience has suggested unlikely investors in all bubbles. In the 30's it was the shoeshine boy, in the late 70's it was the priest, and the late 2000's it was the sports figures.
   
   Again, the book becomes interesting around page 200 for a discussion about regulation. This discussion was very shallow and never really mentioned the real cause of the housing meltdown. My own analysis always suggested former President Clinton started it and then was allowed to continue unchecked my fellow democrats. In the index of the book you can find Clinton's name mention once. I would say -- not good research for a professor. However, Mr. Shiller is good at conducting surveys.
   
   Towards the end of the book, I figured this is a second edition so he must be like a movie producer trying to profit off his first success. Later, I figure the professor is like any one else trying to make a living -- just slap something together and it might sell! In the end, was I a better investor because I read the book -- No. Did I learn anything new (and useful) regarding economics -- No. If you have to read it, borrow the book from the library.



5. This book does not quite work because the author gives us no algorithm to determine when the market is irrationally exuberant or merely going up.