Reading minds and markets minimizing risk and maximizing returns in a volatile global marketplace PDF
Preview Reading minds and markets minimizing risk and maximizing returns in a volatile global marketplace
Reading Minds and Markets This page intentionally left blank Reading Minds and Markets Minimizing Risk and Maximizing Returns in a Volatile Global Marketplace Jack Ablin Chief Investment Officer, Harris Private Bank with Suzanne McGee Contributing Editor, Barron’s Vice President, Publisher: Tim Moore Associate Publisher and Director of Marketing: Amy Neidlinger Executive Editor: Jim Boyd Editorial Assistants: Myesha Graham and Pamela Boland Development Editor: Russ Hall Operations Manager: Gina Kanouse Senior Marketing Manager: Julie Phifer Publicity Manager: Laura Czaja Assistant Marketing Manager: Megan Colvin Cover Designer: Roberto de Vicq de Cumptich Managing Editor: Kristy Hart Project Editor: Betsy Harris Copy Editor: Keith Cline Proofreader: Williams Woods Publishing Services Senior Indexer: Cheryl Lenser Compositor: Jake McFarland Manufacturing Buyer: Dan Uhrig ©2009 by Pearson Education, Inc. Publishing as FT Press Upper Saddle River, New Jersey 07458 This book is sold with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting or other professional services or advice by publishing this book. Each individual situation is unique. Thus, if legal or financial advice or other expert assistance is required in a specific situation, the services of a competent professional should be sought to ensure that the situation has been evalu- ated carefully and appropriately. The author and the publisher disclaim any liability, loss, or risk resulting directly or indirectly, from the use or application of any of the contents of this book. The views and opinions expressed in this book are those of the authors only and are not to be attributed to Harris N.A. or its parent company, Bank of Montreal, or any of their subsidiaries, affiliates, employees, directors or officers (collectively, “Harris”). Harris does not endorse or support the views or opinions set forth in this book. The authors alone are responsible for the accuracy and reliability of any performance numbers provided in this book. Past performance is no guarantee of future results. This book is not intended to constitute investment advice with respect to any particular security or basket of securities. Harris is not responsible in any manner for direct, indirect, special or consequential damages, howsoever caused, aris- ing out of reliance on the information contained in this book. FT Press offers excellent discounts on this book when ordered in quantity for bulk purchases or special sales. For more information, please contact U.S. Corporate and Government Sales, 1-800-382-3419, [email protected]. For sales outside the U.S., please contact International Sales at [email protected]. Company and product names mentioned herein are the trademarks or registered trademarks of their respective owners. All rights reserved. No part of this book may be reproduced, in any form or by any means, without permission in writing from the publisher. Printed in the United States of America First Printing June 2009 ISBN-10: 0-13-235497-7 ISBN-13: 978-0-13-235497-4 Pearson Education LTD. Pearson Education Australia PTY, Limited. Pearson Education Singapore, Pte. Ltd. Pearson Education North Asia, Ltd. Pearson Education Canada, Ltd. Pearson Educación de Mexico, S.A. de C.V. Pearson Education—Japan Pearson Education Malaysia, Pte. Ltd. The Library of Congress Cataloging-in-Publication data is on file. This page intentionally left blank I dedicate this book to LeeAnn, Elise, Emily, and Lynne Ablin. —Jack This page intentionally left blank Contents Chapter 1 The Year of Investing Dangerously . . . . . . . .1 Chapter 2 The World of Global Macro . . . . . . . . . . . . .11 Chapter 3 Exploit Your Edge; Eliminate Your Weakness I—Beating the Street . . . . . . . . . .27 Chapter 4 Exploit Your Edge; Eliminate Your Weakness II—Battling Yourself . . . . . . . . . .41 Chapter 5 Identifying Metrics . . . . . . . . . . . . . . . . . . . .59 Chapter 6 The Five Factors: Putting Data to Work . . . . . . . . . . . . . . . . . . . . . . . . .81 Chapter 7 The First Factor: Momentum— Befriending the Trend . . . . . . . . . . . . . . . . . .97 Chapter 8 The Second Factor: The Economy— Headwind or Tailwind for Stocks? . . . . . . .115 Chapter 9 The Third Factor: Liquidity— Follow the Money . . . . . . . . . . . . . . . . . . . .133 Chapter 10 The Fourth Factor: Psychology— Greed Versus Fear . . . . . . . . . . . . . . . . . . . .153 Chapter 11 The Fifth Factor: Fundamentals and Valuation . . . . . . . . . . . . . . . . . . . . . . . .171 Chapter 12 Putting It Together . . . . . . . . . . . . . . . . . . .189 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .203
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