Book Description
The 2nd edition of this successful book has several new features. The calibration discussion of the basic LIBOR market model has been enriched considerably, with an analysis of the impact of the swaptions interpolation technique and of the exogenous instantaneous correlation on the calibration outputs. A discussion of historical estimation of the instantaneous correlation matrix and of rank reduction has been added, and a LIBOR-model consistent swaption-volatility interpolation technique has been introduced.
The old sections devoted to the smile issue in the LIBOR market model have been enlarged into several new chapters. New sections on local-volatility dynamics, and on stochastic volatility models have been added, with a thorough treatment of the recently developed uncertain-volatility approach. Examples of calibrations to real market data are now considered.
The fast-growing interest for hybrid products has led to new chapters. A special focus here is devoted to the pricing of inflation-linked derivatives.
The three final new chapters of this second edition are devoted to credit. Since Credit Derivatives are increasingly fundamental, and since in the reduced-form modeling framework much of the technique involved is analogous to interest-rate modeling, Credit Derivatives -- mostly Credit Default Swaps (CDS), CDS Options and Constant Maturity CDS - are discussed, building on the basic short rate-models and market models introduced earlier for the default-free market. Counterparty risk in interest rate payoff valuation is also considered, motivated by the recent Basel II framework developments.
Customer Reviews:
Best book on interest rate models.......2002-12-14
This is the best book available on interest rate models. Very detailed. Much more focused and readable than Rebonato's book. More pragmatic and explicit than Musiela and Rutkowski. Not as theoretical as Hunt and Kennedy. James and Webber also looks very good, but I'm not that familiar with it. All other books have only bits and pieces on interest rates.
The best book I have read on the subject.......2002-05-06
With all the due respect to the other authors I would say that if one is interested in a good theoretical book whihc is also good on the implementation side then the book of Brigo and Mercurion is definetly the best book I have ever read on the subject.
Anyone interested in implementing the LMM/BGM/MSS model in practice is well advised to read it.
I would just say that this is certainly a must have in the field.
New stuff and nice overview: hard to beat!.......2002-01-17
In the late nineties I went through Brigo's innovative work on stochastic nonlinear filtering with differential geometry techniques. I was favorably impressed by results and style, particularly in his dissertation and in his 'geometry in present day science' very readable overview. Interesting results are found and nicely told with accurate - but not pointlessly complicated - advanced mathematics for the problems at hand, I reasoned.
I've followed a similar path from control to finance, and having worked with interest rate models, I couldn't help but order this Brigo-Mercurio book. I had high expectations 'cause these two guys are working in a bank on the real thing.
Sure enough I'm not disappointed.
1-factor models are handled with great care, a ton of formulas and recipes are given. I've never seen this kind of analysis of pricing with Gaussian 1-f models. The new upgrade of the CIR model is interesting and accurate. "CIR++" is now my favorite 1-f model. I like the treatment of lognormal 1-f models and the explanation of Monte Carlo and trees -- the flow-chart for Bermudan swaptions is crystal clear! Plots of market implied structures and volatility calibration are useful additions.
The chapter on 2-f extensions has one of the best discussions on volatility, and two tons of useful formulas/recipes. Two dimensional trees!
The HJM chapter size is OK. I agree - the useful models embedded in HJM are short rate models and market models.
Market models - these three chapters alone are worth the book. You'll find yourself nodding as you read the guided tour. They make it look easy all the time. The exposition is focused, clear, intuitive, detailed. There's also new stuff, just check the calibration discussion! Smile modeling begins with a brilliant tour and ends with Brigo-Mercurio's new approach - the mixing dynamics - deserving a whole chapter if expanded.
The detailed explanation on products is a much welcome original addition. Cross currency derivatives!
Quotes - as in Brigo's old work - are a pleasant diversion while reading. The 500 and more pages are a treat given the competitive price.
Still there's room for improvements - more "CIR2++"! Something on 3-f models. Historical estimation of the correlation matrix and low-rank optimized approximations. Expand smile modeling! More hedging. Something on structured products. Cross currency libor model. chapter 9 - other interest rate models - sounds out of place and can be suppressed for other things.
This book rings true and has useful teachings for students, academics and practitioners. Although it requires some background in stochastic calculus, it's hard to beat on the pricing front. Kudos to Brigo and Mercurio! It only harms there aren't enough books like this.
Nicely written overview of interest rate models.......2001-12-15
This recent book, written by two Italian "quants" Mercurio & Brigo, gives a nice and accessible overview of interest rate models which is a compromise between the practitioner viewpoint, expressed for ex. in Rebonato's book "Interet Rate option models"
and the theoretical viewpoint such as the one in Musiela & Rutkowski.
The authors, themselves PhDs in quantitative finance/ applied maths, wrote this book while working as quants in an Italian bank and this first hand contact with the market gave them a
practical view on the subject which markes this book very interesting.
The book contains a "rational" catalogue of models used in practice ( as opposed to models which are impossible to implement!).
In contrast with academic books on interest rate modeling which deal with HJM formulation, there is a lot of emphasis here on LIBOR and Swap market models
(BGM -Jamshidian models) which reflects the current market practice. This is a positive point since there are not many books with details on implementing and using these "market models".
Part II: Interest rate models in practice is particularly useful because it deals with implementation and calibration which, as any practitioner knows, are important and usually delicate issues.
However calibration issues are dealt with somewhat lightly, especially recent developments on modeling cap/swaption smiles
are not included here.
This book can also be used for a graduate level/PhD course on interest rate models.
There are a lot of numerical examples in the book and mathematics is kept to the necessary level while keeping the
approach both rigorous and understandable.
Overall, it is one of the best books written on the subject.
I highly recommend it to PhD students, quants and researchers interested in this field.
Well written and useful book.......2001-11-04
In my humble opinion, this is the best book on Interest Rate modeling out there. The writing style is clear and focused and the appendices are fantastic. The book is rigorous but someone with some background in Stochastic Calculus will find it easy to follow. If you need refresher, dont worry the authors have you covered, see the appendix on Stochastic Calculus. Not an introductory book. Very exciting book.
Book Description
Global Investing is based on the authors' award-winning research on investment returns. It gives extensive treatment to the returns on all major asset categories--many found nowhere else--and relates these returns to risk, marketability, taxation, and information costs. Supplementing this wealth of information is sound financial advice on building and maintaining diversified portfolios, based on field-tested economic analysis and historical evidence of capital markets throughout the world--including the boom of 1986-1987 and the subsequent crash, as well as recent developments in Europe and on the Pacific Rim. To expand investment choices and help readers get the greatest return in investment markets, Global Investing pinpoints where money has been made in stocks, bonds, cash and cash equivalents, real estate, gold and silver, tangible assets, options, and futures. What's more, it covers the introduction of new financial instruments and opportunities, including asset allocation and derivative securities. Incisive, intelligent, and packed with charts, tables, and graphs, Global Investing helps investors and financial professionals track broad global trends, identify the risks associated with investments in various assets, and select the right investment opportunities.
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Stocks, Bonds, Bills, and Inflation 2007 Yearbook: Valuation Edition (Stocks, Bonds, Bills, and Inflation (Sbbi) Yearbook (Valuation Edition))
Manufacturer: Ibbotson Associates
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Binding: Hardcover
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Stocks, Bonds, Bills, And Inflation Yearbook, 2007: CLASSIC EDITION (Stocks, Bonds, Bills and Inflation (Sbbi) Yearbook (Classic Edition))
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The Age of Turbulence: Adventures in a New World
ASIN: 0979240212 |
Customer Reviews:
Best Information About Silver I've Come Across.......2007-06-27
David Morgan the author, has done one of the best jobs I've ever seen, in explaining the demand and supply problems that presently are causing silver prices to move up. He not only covers silver, but gold as well, just not in as much detail. If your considering buying or investing in silver, this book is a must. If your not thinking about silver as an investment you need this book even more. He not only proves his point, he gives plenty of online sites to investagate the case for silver moving up. Written in 2006 the information is up to date and right to the point....
An interesting book on silver investing.......2007-03-31
Content:
The book contain 11 short chapters which takes us from the fundamentals driving the silver sector as the supply and demand in Chapter 1, then the misconception that photography is the major driver of the silver sector (Chapter 3), fraudulent activities of the silver & gold leasing (Chapter 4). David Morgan explains very well, why silver is money and not a commodity in Chapter 6. Chapter 7 is devoted to the new uses for silver and the coming demand squeeze, Then from chapter 8 to 10 he briefly discuss different types of investments alternatives in the sector with bullion and coins, silver & mining stocks and leveraged type of investments. He finishes with some future price projections for silver.
Positive:
- If you read a book about a sector such as small as silver, you want facts, lots of them... the book sums up what you need to know about silver market that is positive!
- An easy to read book with a good combination of history and economic of the silver sector.
- The price of the book.
Negative:
- Maybe a more balanced view on the silver market (i.e not so bullish all the time).
Overall i think David Morgan does a good job giving us the skinny on silver in 110 pages. This is one of the few books about the silver sector, and absolutely worth the few hours it takes to read it.
Serious hard assets investor will be excited reading this book. On the other hand for short term speculators this is unfortunately not a book for you, it will only tell how to invest on silver for the years to come and that is unfortunatly not enough for the trader.
Colladoproperties.com.......2007-03-28
A great book on silver investing. A quick and easy to read book on the fact that silver maybe the last investment left for the have nots in the 21st century.
The secret to surviving the next few years is keeping your wealth in real money, not in the U.S. dollar. Buy things that hold their value and are exchangeable all over the world. Commodities such as gold and silver have a world market that transcends national borders, politics, religions, and race. A person may not like someone else's religion, but he'll accept his gold and silver.
One of the reasons why I'm bullish on gold and silver is because the American public is still sound asleep to this asset class. Most Americans have no idea how or where to buy physical gold and silver. The outlets that sell gold and silver I have visited are already low on inventory.
If and when the American public wakes up to the reality that their dollars are not money, but a currency, the panic and stampede will begin. Should that happen, today's prices for gold and silver will look like bargains. Especially for silver.
Informative Silver Facts.......2006-10-21
A well written book in simplied terms that can inform the new investor or professional manager/trader. There is some great insight as to why the great underevaluation of silver relative to gold & copper exists. It gives great advice on how one can profit from silver via physicals, futures and stocks. The photography myth is explained as well. For its low cost it a mandatory read for someone considering investment in silver, silver futures/options and/or silve stocks.
Need convincing or singing to the choir?.......2006-09-13
I was disappointed. If you are a skeptic who needs to be convinced to invest in silver, including history lessons, this is the book for you.
If you want to see specific examples of transactions, the Author's words in the Acknowledgements: "On that note, I challenge the reader to look beyond this book and gather information to satisify yourself as to the true nature of money, precious metals, the financial system and your position as being one of the knowledgeable or not." Perhaps the Author's touted $60 for 6 months trial subscription to "The Morgan Report" will provide the answers. But not for me.
I certainly agree to look elsewhere.
Customer Reviews:
Why isn't this book more famous?.......2007-05-18
Olson's book is difficult to classify, since on the one hand, it's not for the general reader, but on the other hand not so forbiddingly dense that it should be classified as scholarly. Lemme put it this way: it's for economically literate people. It makes use of, say, the concepts describing steady-state growth, supply factors, and expeduture-approach identities that one learns about in a college econ class.
If you don't know what I just said, I imagine much of this book will be opaque to you.
But if you can handle such stuff (and don't let me scare you too much: the gist of this book is clear enough even if you can't), man, O man! Olson's thesis is so brilliant it will give you whiplash!
In brief, great empires invariably collapse not because of cultural overstretch, internal discord, or military misfortune, but rather because the very process of building an empire gives rise to myriad vested interests that eventually claw their way so deeply into the neck of the government that they eventually choke it. In other words, empires collapse because they are invariably made sclerotic by special-interest groups.
An idea that is truly, classically brilliant: not obvious, but once developed at length, undeniable and endlessly applicable.
Taking "The Logic" Cross-National.......2007-03-11
Olson seeks to explain why some nations achieve high rates of economic growth while others suffer bouts of stagflation. He contends that the number and strength of "distributional coalitions," coupled with the length of economic and political stability will influence a nation's rate of economic growth. As such, Olson's hypothesis is two fold. First, Olson argues that states with lower levels of "distributional coalitions" often have higher rates of economic growth. Second, states which have experienced prolonged periods of disorder or armed conflict will have lower numbers of interest-group, or collusion organizations.
Olson's explanation builds upon his early work in The Logic of Collective Action, which holds that "...large groups, at least if they are composed of rational individuals, will not act in their group interest" (18). Rather, the rational actor will seek to further his or her self-interest, and will subsequently free-ride when possible. Olson expands the scope of this logic to encompass not only the rationality of the individual, but the rationality of the firm in explaining The Rise and Decline of Nations.
As the power of the firm expands, the firm seeks to maximize its own utility at the expense of a societal common good. In order to simplify a complex argument, we can think of Olson's theory in this way. An organization or firm will not expend its energy to create a benefit to society writ large, as it, and its members, will only receive a fragment of that benefit in relation to the costs incurred. On the other hand, if the same firm seeks to maximize its utility, it will seek to obtain a larger slice of the social "pie." In so doing, it may lower the benefits of society as a whole, but will significantly expand its own gain and that of its members. Meanwhile the firm will only incur a fraction of the costs such action projects on society at large. As such, Olson writes, "The great majority of special-interest organizations redistribute income rather than create it and in the ways that reduce social efficiency and output" (47).
Olson argues that a society with long-term stability - free from war, and economic and political turmoil - tend to accrue more special-interest and collusion groups. This occurs because it takes time and reasonable amount of stability for such interest-groups to organize, solidify, and begin to achieve some collective benefits for their members. Once collective benefits are seen as the result of organization, a host of other interests will begin to coalesce and seek to obtain gains for themselves. What emerges is a highly pluralistic society.
This leads us to the second part of Olson's hypothesis, those nations with high numbers of special-interest or collusion groups have lower levels of economic growth. Olson writes, "Distributional coalitions slow down a society's capacity to adopt new technologies and reallocate resources in response to changing conditions, and they reduce the rate of economic growth" (65). First, distributional coalitions stymie technological adoption when such innovation stands to benefit a rival group. A present day illustration can be found in a labor unions vehement opposition to the implementation of labor saving machinery. Second, distributional coalitions will attempt to block policy initiatives that change the status quo. When policy needs to be developed to increase economic or social advancement, the special-interest groups are likely to feel a certain displacement and will act to prevent such policy. According to Olson, these actions, coupled with others, often lead to policies which promote policies which have the potential to stifle economic growth.
On the Virtues of Flexibility.......2006-12-29
I had always wanted to read this book and am glad that I did !
On the one hand the argument is quite obvious and one is left wondering what is really novel in this work (virtues of competition, market flexibility etc.), but I found the last chapter to be an interesting perspective on the effect of imperfect competition on the impact of changes in nominal demand on employment and inflation.
Olson explains social rigidities ,with all their negative collective effects, as the outcome of rational microeconomic behaviour and integrates these into macroeconomic theory (other mainstream macroeconomic theory attribute price rigidity to error or simply make ad hoc assumptions on wage rigidity).
This is a very valuable and important contribution to macroeconomics and explains why some economies are more resiliant than others. The main message is that governments must either make their economies more flexible or have to rely on macroeconomic conditions not fluctuating too much for acceptable macroeconomic performance.
Not totally bad book, but its thesis is somewhat simplistic.......2006-12-27
This one-idea book by late professor Olson tries to explain why some countries did better than others in terms of economic growth after World War II - namely Germany and Japan, in contrast with Britain. His explanation is that World War II weakened many institutions in those two countries that, by trying to retain their usual privileges, were holding back economic progress. The weakening of those institutions, permitted the economic miracle in both Germany and Japan. In contrast, England's institutions were not as weakened, so they continue to slow England's progress. I suppose that there are grains of truth in Olson's explanation - though if it was true, then the required policy recommendation would be that is good to suffer a devastating war every once in a while. I think Olson omits another possible explanation: the fact that Germany and Japan had both a strong industrial base before the war, a base that was not completely destroyed by it. Britain was in the 1940s suffering a slow economic decline in its industrial base - which really come back from the late 19th century, when Germany overcome Britain as Europe's leading industrial and economic power. And how would Olson had explained that after he wrote the book (in 1982), Britain went through a much higher economic growth than Germany and Japan - without the intervention of a war. So, while the book is interesting to read, I think its thesis is way too simplistic.
Powerful marginal explanation.......2006-06-06
Holding productive and destructive efforts constant, small distributional coalitions have the incentives to form political lobbies and influence policies that tend to be protectionist and anti-technology; since the benefits of these policies are selective incentives concentrated amongst the few coalitions members and the costs are diffused throughout the whole population, the "Logic" dictates that there will be little public resistance to them; as time goes on, these distributional coalitions accumulate in greater and greater numbers, the nation burdened by them will fall into economic decline.
However, if we think beyond the "natural" cost-incentive structure of Olson's "collective action logic", there are then four possible directions:
1. intentionality from the knowledge of this logic results in certain institutional design that prevents the nagative effects of the distributional coalitions;
2. the dynamics of distributional coalitions may be changed by political or economic factors, e.g., globalization may affect the formations of the distributional coalitions so that the power of protectionist coalition is now balanced by a coalition of big importers;
3. If a society has positive economic growth while distributional coalitions in fact have negative impact on it, or if a society has negative economic growth while distributional coalitions in fact have positive impact on it, then we should further look at how a society's institutions favor or disfavor its productive and destructive efforts;
4. Distributional coalitions may be formed by the pure "logic", they can also be formed by institutional incentives; they could be "natural" due to the free-riding logic, but they are more likely to be "institutionally-induced".
The explanation power of distributional coalitions comes from the strength of its "internal logic", we could be easily overwhelmed if "external logic" is neglected. Still, Olson's contribution is his offering of a powerful marginal explanation for the academic world.
Customer Reviews:
A Step beyond Asset Allocation and Annual Rebalancing.......2007-02-24
For all of us that are interested in taking a more active role in our investments, the processes in this book are a good next step. There is a rare balance of acceptance of risk and potential gain in the author's suggested quarterly re-allocation method. The method is not a "read the market" approach, which virtually no one can do consistently, if at all. It is rather a method to use recent fund performance as a purchase / reallocation guideline for short periods of time (as in quarterly). It is definitely not for everyone, because of the quarterly attention required. A very good incremental step in a maturing investor's education.
Important Investment Guide for the Novice and Expert alike.......2006-11-27
Being a financial advisor, I've come across books that range from the very basic to the ridiculous.
Appel's book, although more conventional then his previous titles, lays out a comprehensive, although extremely practical and relevant strategy for 1) understanding how the markets both stocks and bonds work and 2) giving the investor various options to use that although do involve time and some monitoring, provide a solid blue-print step by step guide that will allow them to more intelligently invest with their hard-earned assets while reducing risk where possible.
Moreover, the combination of fundamental and technical analysis in security selection allows the investor to capitalize on both areas of the market that are affected by emotional factors (external events) but also takes advantage of proven technical and analytical strategies that in the long-haul will give the investor above market gains.
Highly recommended.
Practical Investing Guide for Self-directed Investors.......2006-11-07
Gerald Appel is a well-known author, technical analyst (and developer of the Moving Average Convergence Divergence (MACD) indicator) who has written a practical guide to investing while dispelling a number of Wall Street myths on along the way. His book's purpose is to help readers who have limited time on their hands become active intelligent investors, as well as to help those individuals who are willing to put in more time and effort.
In the book, Appel covers specifically which vehicles to invest in, the timing of the buys and sells, and how to construct a portfolio that is diversified and balanced based on the individual's age and financial situation. Throughout the book, he stresses the importance of active, informed, self-directed investing instead of the out-of-date and risky buy and hold approach which "may or may not service investors purposes in the future."
The author suggests that investors focus not only on the U.S. stock market, but also on the overseas markets. He recommends investing in U.S. stocks, bonds, and money market instruments, as well as the more unfamiliar foreign bonds and stocks, real estate, and investments in foreign countries.
Appel kicks off the book covering the myth of why buy and hold is not a risk-free investment strategy compared to active management. He shows that by using a few indicators such as the NASDAQ/NYSE ratio, direction of interest rates, public sentiment, and the Best Six Months Strategy (buy at end of October and sell in May and go into cash until next October) that investors can reduce their risk and obtain decent investment performance. For example, by using the NASDAQ/NYSE relative strength ratio with a 10 dma crossover signal, according to Appel it is possible to beat the market's performance with about half the risk.
In another chapter, the author compares three diversified mutual fund portfolios showing how different market segments work well together to reduce risk and improve returns. He covers the basics of how to select the best mutual funds by providing the most important characteristics to consider for the long run. Furthermore, he illustrates how to pick funds that are in the top decile of performance.
Appel devotes a separate chapter to income investing suggesting short-term bonds with high credit ratings, and current interest flow. In a section on maximizing safety he mentions T-bills, money market accounts, and setting up a bond ladder with wide diversification. He also reviews what to focus on for maximum potential returns, as well as balancing risk and return. A follow-on chapter reviews the keys to securing junk bond yields at Treasury bond risk levels. Another chapter reviews investing in REITs while another covers investing abroad using open-end and closed-end funds as well as ETFs.
Appel favors ETFs as a new way to invest replacing the typical mutual funds. He contrasts the pros and cons of ETFs, the different ETF categories, and how to create and maintain a diversified portfolio. He provides three specific sample portfolios for different types of investors.
The author's market timing approach encompasses both fundamental and technical analysis. On the fundamental side he reviews the P/E ratio, bond yields, earnings yields and provides guidance on how to interpret the readings. On the technical side, he discusses the four year and presidential election market cycles, advance decline line, and new high new low breadth indicator.
Overall, Appel provides readers with a time-tested practical approach to take control of their investments. For those readers that prefer investing using their own skills this book will provide and excellent plan for moving ahead and succeeding.
Good book.......2006-10-31
Really like this book. Covers sector rotation, etf's, how to position yourself to profit regardless of the market. Good, usable information. Yes it is backtested info. Use at your own risk. I like it!
Average customer rating:
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Stocks, Bonds, Bills, And Inflation Yearbook, 2007: CLASSIC EDITION (Stocks, Bonds, Bills and Inflation (Sbbi) Yearbook (Classic Edition))
Manufacturer: Ibbotson Associates
ProductGroup: Book
Binding: Hardcover
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Stocks, Bonds, Bills, and Inflation 2007 Yearbook: Valuation Edition (Stocks, Bonds, Bills, and Inflation (Sbbi) Yearbook (Valuation Edition))
ASIN: 0979240204 |
Amazon.com
Stephen Leeb and Roger Conrad, editors of the Personal Finance investment newsletter, believe that in the very near future record levels of inflation will dramatically alter the world of investment.
The Agile Investor: Profiting from the End of Buy and Hold lays out their carefully considered strategy for dealing with the resultant volatility. The array of long-range opportunities suggested in their subsequent "investment road map" includes oil, bonds and real estate, as well as entrepreneurship and emerging markets.
Book Description
Stephen Leeb has been called Americas #1 market timer by leading financial publications. He appears regularly on televisions Wall Street Week, CNN, CNBC, the Nightly Business Report and other shows, and is the editor of Personal Finance Magazine, the most widely read investment advisory in the country. Now Stephen Leeb addresses the coming inflationary times, explaining the reasons behind the markets dangerous volatility and detailing his innovative investment strategy for surviving, and profiting from, these fluctuations. Written for the layperson, but savvy enough for the most sophisticated money manager, The Agile Investor advises that the most successful investor will be the one who can quickly identify the signs of a changing market, then act decisively. From learning when to invest in real assets like gold, energy and real estate, to finding undervalued stocks, to tapping into the myriad investment opportunities abroad, smart investors will reap the benefits of Stephen Leebs advice.
Customer Reviews:
Good and alarting education.......2007-03-19
While the inflation age did not come, as of today, as predicted by the authors, the book did correctly predict somethings that happened in the last decade: oil price went even higher than their $50 target, commodity prices increased a lot, gold price has doubled close to $650 per ounce, real estate prices shot up in most areas, although the CPI has stayed lower than the interest rate, and both at low level. International funds returned better than in US, partly with the help of depreciating US dollars. Stock market did get big crashes two times around 9.11 and in end of this Febuary. Housing foreclosure is hitting some financial institutions.
Some investing strategies proposed by the authors have remained true and useful based on high inflation, only that their precondition was not met, which is a happy thing to most people, and the credit of which I think should be given to the market oriented monetary policies of the more experienced Federal Reserve. However, by reading this book, not only can we learn a different thinking, we can also become more alarting and prepared just in case a new inflatinary time comes ahead.
The book also provided some valuable financial data, though which seem obsolete at today's date.
A good book for every investor to read.......2005-04-08
[** "Sometime in the next ten years (the book was published in 1997 so call it 2 years), inflation will crest at over 20 percent. Mortgage interest rates will hit the high teens. A gallon of low-grade gasoline will sell for $5. The value of an ounce of gold will reach $1,000 and the price of a single family home will double." These dire predictions begin this fascinating book, which is rather unfortunate, as the inflation rate is still around 3.5%, the mortgage interest rate is around that, the price of gasoline is about $2.20 per gallon, gold is stable at $412 an ounce, and while the prices of houses have gone up, they are not even close to doubling. Such is the danger of putting predictions on the first page of your book. **]
The authors of this book see a coming time when the electorate in many countries, including the U.S., will pressure their governments to artificially stimulate economic growth, which will result in the kind of inflation that was experienced in the 1970s. The reason that people will demand economic growth is that they see that their incomes have actually declined in buying power, resulting in a decline in standard of living. You see, when the world was in the industrial era, rises in productivity resulted in increases in production, and rises in wages. In the new service era, rises in productivity have resulted in decreases in the need for workers, which decreases the cost of the services and depresses the wages for the workers overall.
To make matters worse, the new service economy requires educated employees, at the same time that the American education system is costing more, and producing poorer educated graduates. (This caused by the fact that falling wages for teachers means that schools are now filled with unqualified educators.) And now that Third World countries are trying to industrialize, the late 1990s should see a skyrocketing of commodity prices. Also, the American economy is awash in paper money, which is a definite inflationary pressure.
After this hard hitting, and frankly dire, analysis, the authors launch into Part II of the book, which gives advice on what you should do to not just survive the coming inflation, but to actually prosper.
OK, as the paragraphs above should make clear, the authors of this book take an alarmist view of current and future trends, resulting in some embarrassment. However, that said, I did find their analysis of the current situation in the American economy to be sound. I merely think that to sell this book, they painted the picture much more darkly than was prudent. Overall, I did find this to be a thought provoking highly informative read.
Obviously, the inflationary explosion that the authors foresaw for the late 1990s did not occur, but the inflationary pressures are there. (Due to increasing demand in China and other parts of the world, the price of crude oil has been on the increase, and is unlike to make any significant falls.) So, this is a good book for every investor to read and consider.
My one complaint against this book is that it does not give any advice for those of us whose investments are run through a 401(k) plan, which does not allow for quick purchases and sales, or for the purchase of select stocks. But, that said, I am glad that I read this book, and I highly recommend that you read it as well.
Great advice for the current economic situation.......1998-10-11
Leeb and Conrad were a couple years ahead of their time with respect to their predictions of massive economic change. As a reader of Dr. Leeb's newsletters, I have followed his advice for quite some time, and I believe the time is nigh for their astute analysis of world economic trends. Investors small and large should have this book on their reading list. Today's policy-makers are facing the choices that are described in the book -- between rapid economic growth with accompanying inflation, or the other, less likely, but devastating worldwide deflation and depression. Either way, the long bull market is over, and the book shows investors the way to profit from either eventuality.
A must read for any one interested in todays wild economy........1998-09-26
About two years ago I read Agile Investor, by Stephen Leeb and Roger Conrad. The book makes a strong - and indeed at the time I thought compelling - case for inflation or at least the end of a world in which growth and no inflation exist together. The last two years seemed to have proved the book wrong as inflation remained very low. However, the events of the past several months have made Leeb and Conrad seem like prophets. As I understand the key forecast in the book was that we would reach a point where policy makers would have to choose between inflation and deflation and inflation would win out. The consequences of inflation are spelled out in exquisite detail as are the much more unfortunate consequences of deflation. This book is must reading for anyone with any interest at all in today's financial markets.
Uncannily accurate post-bull market investment advice........1998-09-26
When I first read The Agile Investor over a year ago, I found its forecast of a long-term acceleration in inflation to be well-reasoned. But it seemed implausible in the context of the "goldilocks" economy and rip-roaring stock market of that time. About a month ago, I picked up the book again and found to my surprise it had largely forecasted the deflationary catastrophe that's now threatening the world. Suddenly, its basic contention that the world must choose now between higher inflation and a devastating new Great Depression is being debated in the highest levels of government, with inflation being by far the likely winner. I strongly recommend this book to anyone who wants a greater understanding of where the world economy is heading, which I believe is critical for building a profitable long-term investment strategy.
Book Description
How should governments and central banks use monetary policy to create a healthy economy? Traditionally, policymakers have used such strategies as controlling the growth of the money supply or pegging the exchange rate to a stable currency. In recent years a promising new approach has emerged: publicly announcing and pursuing specific targets for the rate of inflation. This book is the first in-depth study of inflation targeting. Combining penetrating theoretical analysis with detailed empirical studies of countries where inflation targeting has been adopted, the authors show that the strategy has clear advantages over traditional policies. They argue that the U.S. Federal Reserve and the European Central Bank should adopt this strategy, and they make specific proposals for doing so.
The book begins by explaining the unique features and advantages of inflation targeting. The authors argue that the simplicity and openness of inflation targeting make it far easier for the public to understand the intent and effects of monetary policy. This strategy also increases policymakers' accountability for inflation performance and can accommodate flexible, even "discretionary," monetary policy actions without sacrificing central banks' credibility. The authors examine how well variants of this approach have worked in nine countries: Germany and Switzerland (which employ a money-focused form of inflation targeting), New Zealand, Canada, the United Kingdom, Sweden, Israel, Spain, and Australia. They show that these countries have typically seen lower inflation, lower inflation expectations, and lower nominal interest rates, and have found that one-time shocks to the price level have less of a "pass-through" effect on inflation. These effects, in turn, are improving the climate for economic growth. The authors warn, however, that the success of inflation targeting depends on operational details, such as how the targets are defined and when they are announced. They also show that inflation targeting is not a panacea that can make inflation perfectly predictable or reduce it without economic costs.
Clear, balanced, and authoritative, Inflation Targeting is a groundbreaking study that will have a major impact on the debate over the right monetary strategy for the coming decades. As a unique comparative study of what central banks actually do in different countries around the world, this book will also be invaluable to anyone interested in how economic policy is made.
Customer Reviews:
Excellent book.......2007-09-17
Inflation Targeting is a kind of monetary policy first exercised in New Zealand, in practice, and afterwards brought to the academy research. This book analyses the way that this and many other countries dealed with the new approach of conducting monetary policy towards inflation control, bringing a full and comprehensive description of the behaving of their economies as well as their main macroeconomic variables, before, during and after the targets have been set. It is extremely well written, making its reading very pleasant, and provides the reader a full description of the inflation targeting implementation.
fair.......2006-03-31
This book is designed essentially all audiences, i.e., it could an easy read for undergraduate economic students. The book, while somewhat repetitive, is a good 'read' especially as one of the authors is now the Chairman of the Federal Reserve who advocates inflation targeting.
The prior reviewer was unhappy that developing countries' central bank experiences were not included in the book. I am afraid that would have made for an unweildy book given that the focus is on credible inflation targeting regimes with a 'track record' - not countries who are in need of such a regime. Such a discussion can be found in other books. It is not a coincidence that the authors focused on developed countries - that is their interest and specialty.
The focus is not on policy prescriptions per se but what has and has not been effective. This is not an IMF prescription manual for a developing country. The countries studied underwent shocks but their relative stability leads to a more certain analysis.
Yawn.......2000-01-13
I have never been a fan of condensed books for the obvious reason that they leave out content and motivation. This book, however, could be shrunk by 3/4 without any real loss. Yes, there is much in-depth case study information here, but the paper could have been much better used by substituting much of it for some harder, theoretical motivation and analytical discussions. The authors are capable of this. Also, despite the painstaking redundent detail and a few regressions, for me the authors fail to place inflation targeting and inflation targeting countries into the greater context of inflationary policies and countries facing inflation. It surprises me that there is no mention of some of the, especially developing countries, where inflation has been a serious problem and where most battles of the future are likely to be fought.
Heavy on the case studies and mildly repetitive........1999-09-21
An easy to read book for people of all levels. It takes the reader through case studies on the various countries which have introduced inflation targeting. This is interesting from a historical perspective, but since inflation targeting really is a very simple concept (announce an inflation target, describe why you aim to hit this target, make it clear how you shall go about achieving this target and at all times be transparent in your pursuit of that target) the book tends to be repetitive. This book simply goes over too many similar regimes and thus cannot help but cover the same points over again. The last chapter is a study of the U.S. (a rare example of a country with very steady inflation which has not introduced an explicit inflation target) with some recommendations on how (and why) it should implement an inflation target. This book is recommended if you want very indepth case studies on the introduction of inflation targeting in countries as different as Sweden, New Zealand, The U.K. and Australia, but if you only need a quick overview of what inflation targeting is then buy a good general Economics textbook and read the section on it.
Book Description
The global market for inflation-indexed securities has ballooned in recent years, and this trend is set to continue. This book examines the rationale behind issuance and investment decisions, and details the issues facing anyone who designs indexed securities, illustrating them wherever possible with actual examples from the international capital markets. In particular, an extensive review of indexed debt markets throughout the world is provided - including for the first time, a comprehensive and consistent set of cash flow and price-yield equations for the instruments already in existence in the major bond markets - forming an important reference for those already experienced in the field, as well as practitioners and academics approaching the subject for the first time.
The book also provides unique insight into the development of inflation-indexed derivative products, and the analytical tools required to value such instruments.
Download Description
"The global market for inflation-indexed securities has ballooned in recent years, and this trend is set to continue. This book examines the rationale behind issuance and investment decisions, and details the issues facing anyone who designs indexed securities, illustrating them wherever possible with actual examples from the international capital markets. In particular, an extensive review of indexed debt markets throughout the world is provided - including for the first time, a comprehensive and consistent set of cash flow and price-yield equations for the instruments already in existence in the major bond markets - forming an important reference for those already experienced in the field, as well as practitioners and academics approaching the subject for the first time.
The book also provides unique insight into the development of inflation-indexed derivative products, and the analytical tools required to value such instruments. "
Customer Reviews:
Great overview on Inflation based products.......2004-03-25
wow, incredible improvement to the first edition. coverage of all important aspects (i can think of) on inflation. history, example issues, purpose of use from investor & issuer as well as technical points regarding calculation and pricings.
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