The Fearful Rise of Markets Global Bubbles, Synchronized Meltdowns, and How To Prevent Them in the Future

by Authers, John

• ISBN13: 9780137072996
• ISBN10: 0137072996
• Edition: 1st
• Format: Hardcover
• Copyright: 2010-04-16
• Publisher: Ft Pr

Summary

"This enjoyable, fast-moving book is concise, relevant, and perceptive. My bottom line is a simple one: This book should be read by all those interested in the way markets operate, be they investors, analysts, or policy makers." From the Foreword byMohamed A. El-Erian, CEO and co-CIO of PIMCO, and author ofWhen Markets Collide "This book is a must-read for anyone concerned about how we can avoid recurring debt-induced busts in the years ahead, or anyone who wonders how to invest if (when!) the crisis returns. Authersrs" insights on the global financial crisis are profound." Robert D. Arnott, Chairman, Research Affiliates, LLC, and author ofThe Fundamental Index: A Better Way to Invest "This book illustrates the dangers to investors who fail to recognize that global asset markets have become more synchronized over time. In a crowded field of works on the financial crisis, Authersrs" work is unique in both its insight and style." Robert R. Johnson, Ph.D., CFA, Senior Managing Director of the CFA Institute "John Authers has combined his journalistically honed FT skills with great insights. Serious investors and policymakers should read this book." David R. Kotok, Chairman and Chief Investment Officer of Cumberland Advisors "John masterfully drives a stake through the myth of global economic decoupling one chapter and example at a time. A must-read in todayrs"s economy." Vitaliy Katsenelson, Director of Research at Investment Management Associates, Inc, author ofActive Value Investing: Making Money in Range-Bound Markets Are we barreling toward another massive global financial catastrophe? How can so many bubbles form all at once? Why are so many "disconnected" markets now capable of collapsing in unison? In this remarkably readable book, award-winningFinancial Timescolumnist John Authers takes on these critical questions and offers deeply sobering answers. Authers reveals how the first truly global super bubble was inflated--and might now be inflating again. He illuminates the multiple roots of repeated financial crises: a massive shift in investing power from individuals to big institutions; the migration of key decisions from banks to capital markets; the wholesale financialization of many asset classes; and fundamental failures of both theory and policy. The Fearful Rise of Marketspresents a truly global view, avoiding oversimplifications and ideology as it outlines how we got here and where we stand. Even more valuable, it offers realistic solutions--for decision-makers who want to prevent disaster and investors who want to survive it. bull;The herd grows ever larger--and more dangerous How institutional investing, indexing, and efficient markets theory promote herding bull;Cheap money and irrational exuberance Super fuel for super bubbles bull;Too big to fail: the whole story of moral hazard Banks, hedge funds, and beyond

John Authers, investment editor for the Financial Times, serves as its main commentator on international markets. In this role, he has become one of the world’s most influential financial journalists, with bylined columns on display pages of Financial Times five days a week. He will soon take over as the head of the Financial Times’ flagship Lex column.

 

Authers speaks worldwide and appears frequently on major U.S. and global media, including the BBC, CNN, MSNBC, NPR, and PBS. He was recently honored by the State Street Institutional Press Awards as the UK’s Investment Journalist of the Year for his coverage of the collapse of confidence in investment theory.

 

His book, The Victim’s Fortune, coauthored with Richard Wolffe, earned him the prestigious Best of Knight-Bagehot Award.

 

Authers lives and works in New York with his wife Sara Silver, also a financial journalist, and their three children.

 

Table of Contents

Acknowledgments	p. ix
About the Author	p. xii
Foreword	p. xiii
Timeline	p. xvi
The Fearful Rise of Markets	p. 1
The Rise
Investment Becomes an Industry	p. 9
Indexes and Efficient Markets	p. 16
Money Markets Supplant Banks	p. 25
From Gold Standard to Oil Standard	p. 32
Emerging Markets	p. 40
Junk Bonds	p. 48
The Carry Trade	p. 55
Foreign Exchange	p. 62
Irrational Exuberance	p. 69
Banks Too Big to Fail	p. 76
Hedge Funds	p. 83
Dot Corns and Cheap Money	p. 90
BRICs	p. 97
Commodities	p. 104
Credit	p. 112
The Fall
Ending the Great Moderation	p. 120
Quant Funds	p. 127
Trust	p. 133
Bank Runs
Bastille Day: Reflexive Markets	p. 145
Lessons from Lehman	p. 152
Politics and Institutions	p. 158
The Paradox of Diversification	p. 163
The Fearful Rise
Decoupling	p. 171
Banks Bounce	p. 179
A New Bubble?	p. 186
Conclusion: 2010 and After	p. 194
Notes	p. 202
Selected Bibliography	p. 215
Index	p. 222
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