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

My first impression of The Fearful Rise of Markets--apart from asking myself just how many books concerning the recent economic and market turmoil have been written in the last 12 months--is that this is a very fast and easy read. There are about two dozen short chapters, each averaging six or seven pages, with each chapter followed by very short, bulleted summary points. (Even if you didn't realize the author, John Authers, is the investments editor of the Financial Times, you'd soon guess that he is used to writing short blurbs on a variety of economic and investment topics.) Frankly, having read enough market meltdown books in the last several months, I was prepared to be unimpressed with this book. It turns out, however, I am impressed. Although the book does not plow a lot of new ground, it does cover many topics that are important to an understanding of the interconnectedness of markets (and the world economy). Although your reaction to this book may be different than mine, more than anything else I took away an appreciation of the way in which Authers helps pound in the observation that historical correlations among economic variables are apt to change (sometimes dramatically) when large numbers of market participants behave as if these historical correlations are set in concrete. Thus, for example, the widespread acceptance of indexing can help markets become progressively less efficient. Think about that for a bit.Without describing all two dozen chapters, here are some of the topics (besides indexing) the book addresses: How money markets disintermediated banks, the role of junk bonds, the "oil standard," carry trades and their effects, the impact of increasingly professionally dominated investment markets (e.g., herd behavior and "closet indexing"), reflexive markets, the limits of diversification, quant trading, and modern-day bank runs.The author's analysis is pretty good, actually, and given some of the prominent theoreticians and practitioners he consulted in preparing the articles (sorry, chapters) in this book, that's understandable. People like Robert Arnott, Benoit Mandelbrot, Michael Mauboussin and Jeremy Siegel, for example. These guys have written some very interesting material on market behavior. (Two of my favorites are Mandelbrot's "The Misbehavior of Markets" and Mauboussin's "Think Twice.")In short, you could read this book is just a few sittings, or you could digest one or two chapters at a time if you are pushed for time. Either way, it covers a lot of ground, can be easily understood by most readers, and delivers some important analysis. If you are looking for a good summary of many of the important developments in markets over recent decades (with an emphasis on the last 10 years and the recent market turmoil), I'd say this is a very fine choice.

FTのlex columnを今書いている記者による作品です。いくつかの分水嶺ともなる出来事も触れられますが、個々の出来事については、それぞれより適切な作品があるはずです。むしろこの作品は、これらのイヴェントを貫くいくつかのテーマへの着目こそが売りなのです。そのテーマは２つに大別されます。一つは投資の制度化であり、もう一つはco-relationです。投資の制度化とは、ファイナンス経済学の理論を取り入れることにより出来上がった投資評価のもたらす破滅的な結末です。ベンチマークこそが投資の評価となったため結果としてファンドマネジャーのherd behaviourが促進されることにより、結果として市場のvolatilityを高めるだけでなく、場合によっては、市場の崩壊までもたらしてしまうというわけです。もう一つのco-relationとはco-relateしない資産クラスを求める動きは、投資の制度化の下で、意図しないにも関わらず、全ての資産クラスの高い相関性を結果としてはもたらしてしまうというわけです。最後にいくつかの曖昧な提言がなされますが、報酬制度と資本の自由化という根本的な問題に眼が向けられることはありません。最近のソヴリン・クライシスは間に合わなかったようです。

John Authers is a journalist with 20 years experience writing for The Financial Times. His command of the English language and his knowledge about financial markets are combined in an excellent book that describes the incentives that nearly destroyed the financial system.And we are not out of it yet. Unfortunately, Keynesian professors of economics advocate more transfer of wealth instead of addressing the causes of problem, the incentives that drive bankers and other members of financial institutions to act as they do. "How to Prevent Them in the Future" is the last part of the title but it is a subject that is not covered as well as it could have been. We need regulation. Not "more" regulation but "better" regulation. Every machine and every system needs a governor, negative feedback, to keep it running within design specifications. Authers describes how the growth of markets whittled away at the sound banking and financial regulations that were in place and which now need to be replaced. I bring up Keynesian professors because instead of proper regulations they want to go a step further to micro manage financial institutions, or worse, to use them for social engineering, i.e. more transfer of wealth from producers to the "less fortunate." It is not easy to enact the right kind of regulation on account of the biases of the various stakeholders, right (not enough regulation) and left (too much regulation).If you want the facts about the causes of the financial meltdown without the politico/economic baggage of the learned professors, this is the book for you.

If you are an investor who is looking for answers to how we got into the mess we are in, and better yet what the future may look like, this is the book for you. John Authers has done the best job I've seen of explaining how and why the latest financial crisis occurred. His writing style is very concise and extremely easy to understand. Even better, I think he has put out there enough knowledge and ideas, so that the investor will understand what forces are moving the markets and the implications for the future. Read this book, then reevaluate your own investment strategies and plans for the future.

This was a fantastic read. Short and to the point the author knows his topic and can articulate it well! Would recommend to anyone that would like to know how your money is stolen on the stockmarket