The Bear Book: Survive and Profit in Ferocious Markets - Softcover

Über die Autorin bzw. den Autor

JOHN ROTHCHILD is the bestselling author of the critically acclaimed A Fool and His Money and Going for Broke, among other books. He has also coauthored, with Peter Lynch, One Up on Wall Street, Beating the Street, and Learn to Earn. A former editor of the Washington Monthly and financial columnist for Time magazine and Fortune, Mr. Rothchild has also written articles for Harper's, Rolling Stone, Esquire, and many other periodicals. He has appeared on The Nightly Business Report, the Today show, and CNBC.

Von der hinteren Coverseite

"Rothchild finds some compelling evidence that a Bear might be lurking in the woods. [He] addresses the subject with candor."-The Wall Street Journal

"In a timely antidote to the fever now raging in the markets, Rothchild's new book dishes a long dive when investors least expect it." -Washington Post Book World

April 14, 2000. The Dow drops over 600 points. Investors the world over receive a startling reminder that "what goes up, must come down." Today's exceptionally volatile markets exemplify the hair-raising financial instability that most analysts see as a continuing trend. More than ever before, investors deserve a sound explanation of how to profit-or minimize loss-in such a climate, and be prepared for the inevitable dips. In Survive and Profit in Ferocious Markets, bestselling financial writer John Rothchild provides a rare understanding of profit making when the markets are tenuous, with volatility at every turn. Here is specific, comprehensive, and timely information on:
* Where the economy is going and how exactly to invest in it
* How investors can negotiate the awkward terrain between the new and old economies
* Investment strategies at different stages of a volatile market
* The psychology of investing, a history of the markets, and biographies of prominent investors, including Roy Neuberger and Philip Carret

With wit, wisdom, and a penchant for telling a good story, Rothchild provides all investors, from novices to pros, with the tools to protect their investments and prosper.

Aus dem Klappentext

"Rothchild finds some compelling evidence that a Bear might be lurking in the woods. [He] addresses the subject with candor."-The Wall Street Journal

"In a timely antidote to the fever now raging in the markets, Rothchild's new book dishes a long dive when investors least expect it." -Washington Post Book World

April 14, 2000. The Dow drops over 600 points. Investors the world over receive a startling reminder that "what goes up, must come down." Today's exceptionally volatile markets exemplify the hair-raising financial instability that most analysts see as a continuing trend. More than ever before, investors deserve a sound explanation of how to profit-or minimize loss-in such a climate, and be prepared for the inevitable dips. In Survive and Profit in Ferocious Markets, bestselling financial writer John Rothchild provides a rare understanding of profit making when the markets are tenuous, with volatility at every turn. Here is specific, comprehensive, and timely information on:
* Where the economy is going and how exactly to invest in it
* How investors can negotiate the awkward terrain between the new and old economies
* Investment strategies at different stages of a volatile market
* The psychology of investing, a history of the markets, and biographies of prominent investors, including Roy Neuberger and Philip Carret

With wit, wisdom, and a penchant for telling a good story, Rothchild provides all investors, from novices to pros, with the tools to protect their investments and prosper.

Auszug. © Genehmigter Nachdruck. Alle Rechte vorbehalten.

Chapter 1: Are Stocks Really That Great

Every brokerage house and most financial planners invite a new client-let's assume it's you-to fill out a questionnaire about your income, net worth, financial goals, and other intimacies you'd never share with your friends. Your answers are run through a computer and, in minutes, you get a printout of how much money you'll need in the future and the best way to accumulate it-most likely, by investing your seed capital 100 percent in stocks. This recommendation is based on the assumption that stocks will return 10 to 11 percent a year, as they have throughout the twentieth century.

Here's the catch that's often overlooked: stocks don't go up 10 to 11 percent every year. In fact, after several years of going up faster than 10 to 11 percent, they can be expected to go up slower than 10 to 11 percent, and perhaps they could even go down! At some point, they'll enter a bear market, where a stretch of losses will balance out the latest stretch of gains.

The 10 to 11 percent annual return from stocks is a twentiethcentury phenomenon. Throughout the nineteenth century, stocks returned around 6 percent a year. If ancient history repeats itself, who's to say that stocks in the twenty-first century won't revert to their longer-term performance, throwing every financial plan out of whack? If that happens, all the planners, pension managers, and stockbrokers will have overestimated their clients' wealth at retirement by a wide margin. Instead of the condo in Lake Tahoe, tomorrow's retirees will get the trailer park on the prairie.

As of this writing, and after years of outsized gains, stock prices would have to drop in half, or undergo several years of subpar returns to bring them back into the normal range of 10 to 11 percent profitability. This would inconvenience many people who are relying on stocks to underwrite their retirement, but stocks don't care when anybody retires. They have their own schedule.

Scrape inflation off stocks, and much of the wealth they're credited with producing for investors disappears, even without a bear market. Bob Prechter insists stocks are overrated. Prechter operates out of Gainesville, Georgia, far from Wall Street. Many bearish commentators are camped in the hills where office rent is cheaper and they aren't surrounded by bulls.

Prechter's a Yale grad: opinionated, cogent, well-informed, unflappable. The kind of guy you like to see in an airplane cockpit. (See Bears' Hall of Fame, page 225.) He was a raging bull in 1982. The Dow was at 900; he said it would hit 3,900, and nobody believed him. When the Dow hit 8,000 in 1997 he said it would drop to below 3,000 eventually, and nobody believes him. He's been bearish far too long to hold an audience, but few pessimists are better informed on the subject of how stocks fail to live up to their reputations.

In terms of real purchasing power, Prechter notes, owning the Dow Jones Industrials since 1966 has resulted in zero gain through 1994! The Dow itself advanced from 1,000 to 3,978 in 1994, but the cash you received from selling a share in the Dow that year bought less merchandise than the cash you got from selling a share in the Dow at 1,000 twenty-eight years earlier.

The true Dow has been stuck in a rut in spite of Bill Gates, Sam Walton, and other innovators who have given America its competitive edge. "Consider," Prechter muses, "the implications of a stock market index that made no real progress in nearly three decades, and which is nevertheless historically overvalued."

Prechter argues stock market returns are overstated in other ways. The major averages don't reflect the damage done to smaller stocks in certain situations. The historic returns don't include the many companies that shut their doors and disappear from the listings. The typical portfolio in 1929 included names like Auburn, Cord, Missouri-Pacific, Pierce-Arrow, and Stutz, all of which landed on the trash heap of equities. These total losses surely would drag down the returns from owning stocks, because the owners of those particular shares ended up with zilch.

In any event, the much advertised 10 to 11 percent annual payoff is an imaginary return, from some other planet that has no taxes and no inflation." For a less fanciful accounting of gains on earth, Marty Zweig has created the Deflated Dow Jones Industrials (Exhibit 1).

A successful market timer and chronic worrier who manages more than $4 billion with the primary goal of not losing a penny of it, Zweig started with the famous Dow average, then subtracted for inflation and adjusted for deflation. The result is the actual buying power of dollars invested in stocks over time.

Viewed in this harsher light, stocks have performed quite differently than the raw data suggest. In the 1920s, they enriched investors as advertised, because inflation was minimal in that decade...