A Decade of Delusions From Speculative Contagion to the Great Recession

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Edition: 1st
Format: Hardcover
Pub. Date: 2011-05-03
Publisher(s): Wiley
List Price: $36.70

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Summary

The proven strategies rational investors require for success in an irrational marketWhen the dot-com and real estate bubbles of the 1990s and 2000s burst, few were spared the financial fallout. So, how did an investment advisory firm located in Elkhart, Indiana one of the cities hit hardest by the economic downturns not only survive, but also thrive during the highly contagious speculative pandemics? By remaining rational. In Speculative Contagion Redux: An Antidote for Speculative Epidemics, Frank Martin founder of Elkhart, Indiana's Martin Capital Management offers a riveting and real-time insider's look at the two bubbles, and reflects on how investors can remain rational even when markets are anything but. Outlines strategies the average investor can use to wade through the endless news, information, and investment advice that bombards them Describes the epidemic of market speculation that gradually infects feverish investors Details how investors can spare themselves the emotional devastation and accompanying paralysis resulting from shocking financial lossesInvestors are still reeling from the instability in the market. Speculative Contagion Redux provides the information investors need to achieve safety, liquidity, and yield.

Author Biography

Frank K. Martin, CFA, founded Martin Capital Management in 1987 after twenty years of experience in municipal finance and, later, mergers and acquisitions. Martin's post-secondary degrees are from Northwestern University and Indiana University. He resides in northern Indiana with his wife, Marsha. He has three adult children. Additional biographical information can be found at www.mcmadvisors.com.

Table of Contents

Forewordp. xi
Prefacep. xvii
Lead Us Not into Temptationp. 1
May Reason Prevailp. 2
Patience and Persistencep. 6
The Dean of Wall Street Revisitedp. 12
The Investor's Dilemmap. 19
It's a Numbers Gamep. 20
The Supremacy of Earningsp. 22
ôStealth Compensationöp. 36
Conclusionp. 42
Techno Babble, Techno Bubblep. 43
A Tale of Two Marketsp. 45
Back to the Future?p. 53
Warren Buffett on the Stock Marketp. 58
Is the Internet the Answer?p. 65
What's a Long-Term Investor to Do?p. 68
Investment Redefinedp. 69
ôPop!!ö.comp. 75
Risk: No Longer an Afterthoughtp. 76
Investment Strategy: Is It Time for Technology?p. 83
Is There a Snowball Rolling Our Way, Gathering Mass and Speed?p. 87
The Art/Science of Managing Riskp. 88
Baby Boomers: Whither Goest Thou?p. 99
The Internet and IPO Frenzyp. 100
Fool's Goldp. 101
Goliaths Slainp. 102
Swimming against the Currentp. 113
Prelude to Our Investment ôStrategyöp. 116
Interest Rates: It Had Better Be Uphill from Herep. 127
The Power of Popular Delusionsp. 131
The Mind of Crowdsp. 139
Investment Consultants: The Great Middleman Mythp. 142
The ôGreenspan Putö … Againp. 145
Investment Strategyp. 146
The Reckoningp. 149
Sober in the Morningp. 151
Micro versus Macrop. 151
The Margin-of-Safety Paradoxp. 153
Waiting Patiently for Those Hanging Curvesp. 154
Only Fools Rush Inp. 159
The Rogues Gallery, 2003 Vintagep. 160
Making Progress in the Post-Bubble Environmentp. 164
How Did We Get Here in the First Place?p. 171
The Apogee of the Mutual-Fund Boomp. 181
The Great Abdication of Fiduciary Responsibility: The Defined-Contribution Planp. 188
Where the Buck Really Stopsp. 192
Expanding Concern: A Bigger Bubble?p. 197
Maybe the Markets Are Not Random?p. 200
A Short History of Financial Euphoriap. 218
Fully Deluded Earnings: Penance (?) in the Cuff-Links Coolerp. 222
Run for the Roses: Of Pawns, Guinea Pigs … and ôRetail Investorsöp. 231
ôSwing, You Bum!öp. 242
Marathon Endurancep. 247
What History Teachesp. 253
Free Markets: Popular Delusions and the Madness of Crowdsp. 254
Aspiring to Rationality by Overcoming Heuristic Biasesp. 257
Today Is Not Tomorrow: Cycles and Differing ôOpportunity Setsöp. 259
Inverting the Traditional High-Risk/High-Return Paradigmp. 260
The Inevitability of Regression to the Meanp. 261
There Are No Called Strikes in the Investment Ballgamep. 263
Focus on the Importantp. 264
The Malevolent Mathematical Mystery of Modern Money Management (a.k.a. MPT)p. 264
The Absurdity of the Collective Wisdom of Individual Irrationalityp. 265
Diversification and the Myth of Safety in Numbersp. 266
The New-Era Errorp. 268
Contagious Speculationp. 269
The Means to the Endp. 271
The Perfect Storm? Viewing the Vista through the Lens of Historyp. 272
The Blossoming of the Financial Economy: The Cataclysm in the Creation of Creditp. 281
Bubbles Are Indigenous to the Financial Economyp. 299
If Housing Prices Roll Overp. 306
A Remarkable Story of Risk Management-Run Amokp. 310
The Perfect Storm Reduxp. 325
Capitalism: When ôFinancialö Overwhelms ôCommercialöp. 329
Minsky: A Prequel?p. 332
The Evolving History of Economics and Finance: Reflectionsp. 334
The Tipping Pointp. 339
Excerpt from Quarterly Capital Markets Review, July 2007p. 341
Draft of Letter to MCM Clients, July 2007p. 342
Quarterly Capital Markets Review, October 2007: ôWhat's Up, Doc?öp. 348
Cyclical or Secular? The Current Crisis in the Larger Context of Cause and Effect-Connecting the Dots through Timep. 350
The Misalignment of Incentives and the Opaque World of High Financep. 352
Edging toward the Precipicep. 360
The ôSimpleö Question Why?p. 362
An Early Epitaph for the First Decade of the New Millenniump. 363
Credit-Default Swap Alchemy: Transmuting Junk into Goldp. 371
Counterparty Riskp. 376
The End or the Beginning?p. 381
Origins of a Crisis: Decoupling Risk and Returnp. 384
The Question on Which the Future of Investment Hangsp. 388
The Stockdale Paradox: What Do Survivors Have in Common?p. 389
Know Thyselfp. 390
Harsh Realities and the Snowball Effectp. 394
The Future of Risk Aversionp. 400
Price Is What You Pay, Value Is What You Getp. 404
The Lost Decadep. 407
The Most Powerful Force in the Universep. 409
Value Investors: A Rare Breedp. 411
Risk-Once Again a Four-Letter Word?p. 413
Analysis and Intuition: The Yin and Yangp. 416
Epilogue: ôThis Time Is Differentöp. 427
Those Who Don't Remember History …p. 428
The Insidious Disappearance of Accountabilityp. 430
The Intersection of the Philosophical and the Pragmaticp. 432
Respect for Risk … Just for a Fleeting Momentp. 433
Indexp. 437
Table of Contents provided by Ingram. All Rights Reserved.

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