Capital Ideas The Improbable Origins of Modern Wall Street

by Bernstein, Peter L.

• ISBN13: 9780471731740
• ISBN10: 0471731749
• Edition: 1st
• Format: Paperback
• Copyright: 2005-06-20
• Publisher: Wiley

Summary

Capital Ideas traces the origins of modern Wall Street, from the pioneering work of early scholars and the development of new theories in risk, valuation, and investment returns, to the actual implementation of these theories in the real world of investment management. Starting with the French mathematician Louis Bachelier -- who wrote about the unpredictability of stock prices in the early 1900s -- Bernstein brings to life a variety of brilliant academics who have contributed to modern investment theory over the years, including: Harry Markowitz, who wrote about optimizing the tradeoff between risk and reward. William Sharpe, who shook the pillars of the investment establishment by asserting that the market cannot be beaten. Fischer Black, Myron Scholes, and Robert Merton, who paved the way for the creation of financial derivatives and new ways of controlling risk. Franco Modigliani and Merton Miller, who extolled the central role of arbitrage in determining the value of securities.Filled with in-depth insights and timeless advice, Capital Ideas reveals how the unique contributions of these talented individuals profoundly changed the practice of investment management.

Author Biography

Peter L. Bernstein, one of the foremost financial writers of his generation, is the author of the bestselling, Against the Gods: The Remarkable Story of Risk and The Power of Gold: The History of an Obsession, both from Wiley, as well as five other books. He is President of Peter L. Bernstein, Inc., an investment consulting firm he founded in 1973 after many years of managing billions of dollars in individual and institutional portfolios. He is the founding Editor of the Journal of Investment Management. He has lectured widely throughout the United States and abroad, and has received the highest honors from his peers in the investment profession.

Table of Contents

Acknowledgments	ix
Introduction: The Revolution in the Wealth of Nations	1	(16)
PART I Setting the Scene
1. Are Stock Prices Predictable?	17	(24)
PART II The Whole and the Parts
2. Fourteen Pages to Fame	41	(20)
3. The Interior Decorator Fallacy	61	(14)
4. The Most Important Single Influence	75	(16)
PART III The Demon of Chance
5. Illusions, Molecules, and Trends	91	(21)
6. Anticipating Prices Properly	112	(14)
7. The Search for High P.Q.	126	(23)
PART IV What Are Stocks Worth?
8. The Best at the Price	149	(14)
9. The Bombshell Assertions	163	(18)
10. Risky Business	181	(22)
11. The Universal Financial Device	203	(30)
PART V From Gown to Town
12. The Constellation	233	(20)
13. The Accountant for Risk	253	(16)
14. The Ultimate Invention	269	(28)
PART VI The Future
15. The View from the Top of the Tower	297	(10)
Notes	307	(12)
Bibliography and Other Sources	319	(11)
Name Index	330	(3)
Subject Index	333