Synopses & Reviews
"Do you find yourself wondering: How did we get here? How did the United States of America get into such a predicament whereby in one year, 2008, the financial system nearly vaporized, the stock market crashed, real estate tanked, and major corporations were being bailed out. . . .How did our great country, a bastion of capitalism, devolve into a Bailout Nation where the gains were privatized, but the losses were socialized?"—From the Foreword by Bill Fleckenstein
In Bailout Nation, Barry Ritholtz, author of the popular finance blog www.ritholtz.com/blog/, deftly mixes financial history with an insider's knowledge of modern finance to reveal how we've arrived at one of the worst economic crises ever. Engaging and informative, this book clearly shows how years of trying to control the economy with easy money has finally caught up with the United States and how the government's practice of repeatedly rescuing Wall Street—as well as other industries and organizations—has come back to bite them.
Divided into five compelling parts, this timely guide opens with a brief history of bailouts, detailing their particular patterns and unintended consequences. From here, it quickly moves on to reveal the events, individuals, and institutions that have shaped our current situation. You'll see how various government interventions—in individual companies such as Lockheed during the 1970s, in specific sectors such as banking in the early 1990s, and eventually, entire markets with the rescue of stocks in 2000—opened up a Pandora's Box. You'll also discover how the misguided philosophies of many players, from Fed Chairmen and Presidents to Senators and Treasury Secretaries, promoted the massive meltdown that has engulfed our global economy.
Ritholtz leaves no stone unturned, as he breaks down how the Federal Reserve's interest-rate targeting policies as well as a condition known as moral hazard—the belief that you won't bear the full consequences of your actions—perpetuated the reckless financial risk taking that has pushed us to the brink. Ritholtz also takes some of the biggest Wall Street firms—along with their enablers, the ratings agencies—to task. Page by page, you'll learn how the repeal of certain regulations allowed banks to merge into unruly financial behemoths, while unproven investment vehicles, including collateralized debt obligations (CDOs) and credit default swaps (CDSs), wreaked havoc on both the credit and housing markets.
The United States has abandoned its capitalist roots and become a Bailout Nation. The implications of this are significant and far-reaching. If you intend on navigating today's treacherous terrain, it would be wise to understand how we got here and what you need to get ahead. Scathing, but fair, Bailout Nation puts this financial debacle in perspective—through discussions of past miscues and an exploration of solutions being proposed-and offers a voice of reason during these uncertain economic times.
Review
"Best books to make sense of financial crisis of 2009"
(USA Today)"Best business books of 2009" (Miami Herald)
"Investment Book of the Year" (Stock Trader’s Almanac)
"Succeeds in laying out all that transpired in easy-to-understand language. If you want to know how we got into this mess and what might still be coming, this is the book for you." (Wall Street Journal)
"The author writes with the fury of an insider mortified by the behavior of his heretical peers . . . There is much to be said for the book’s irreverence. Mr. Ritholtz has written an important book about a complicated subject, and yet you could still read it at the beach. Here’s hoping that some policy makers in Washington take it with them on vacation this month." (New York Times)
"Ritholtz makes a valuable new contribution to our understanding of how we arrived at this sorry juncture. He’s smart, sassy and often amusing. If you’re looking for an all-in-one place explanation of what went wrong and why, this is the book for you (or your confused neighbor)." (Bloomberg)
"Bailout Nation’s straightforward, compelling account puts the crisis in context, explains why the US government responded so stupidly, offers solutions, and advises how to prevent a repeat. Ritholtz’s indictment of the financial and political establishment is devastatingly accurate." (Asia Times)
"Before the housing and credit bubbles popped, Barry Ritholtz, a lawyer turned blogger and money manager, was one of the voices crying in the wilderness. His caustic (and occasionally profane) blog, The Big Picture, dissected macroeconomic news and relentlessly cut through spin. His book takes a long view of the roots of the economic crisis, tracing the history of a series of ever more expensive taxpayer-funded bailouts of failed industries." (Newsweek)
"Ritholtz’s book seeks to explain how the United States, once so proud, became "a nanny state for well-paid bankers. Ritholtz may be just the right person to explain the transition to both the disillusioned amateur and the finance junkie. He doesn’t pull his punches or bury the truth in layers of finance-speak, caveats, and disclaimers. Since he began blogging seven years ago, in-the-know readers of his popular blog, The Big Picture, have turned to Ritholtz for his prescient, refreshingly honest commentary on the economy. Anyone interested in understanding the roots of our current crisis should check out the book.." (Freakonomics)
"A comprehensive crisis scrapbook compiled by the money manager behind the popular financial blog the Big Picture in a quippy, no-nonsense voice..." (New York Magazine)
"These are some of the provocative and even dangerous questions that Barry Ritholtz takes on in Bailout Nation…Above all, Bailout Nation is about the socialization of risk and the privatization of profits." (Forbes)
Review
"It is quite simply the best and most comprehensive treatment of the subject to date." (
Financial Times, Monday 3rd December 2007)
"The Year's most exhaustive, and often entertaining, coverage of the behavioural literature." (Financial Times, Saturday 15th December 2007)
"...one of the few 'must read' books on the topic of investing." (The Herald - Glasgow, Saturday 2nd February 2008)
"…a fantastic insight into how markets operate… [and] one of the few "must read" on the topic of investing." (The Herald, Sat 2nd February 2008)
Synopsis
An engaging look at what led to the financial turmoil we now find ourselves inBailout Nation offers one of the clearest looks at the financial lenders, regulators, and politicians responsible for the financial crisis of 2008. Written by Barry Ritholtz, one of today's most popular economic bloggers and a well-established industry pundit, this book skillfully explores how the United States evolved from a rugged independent nation to a soft Bailout Nation-where financial firms are allowed to self-regulate in good times, but are bailed out by taxpayers in bad times.
Entertaining and informative, this book clearly shows you how years of trying to control the economy with easy money has finally caught up with the federal government and how its practice of repeatedly rescuing Wall Street has come back to bite them.
- The definitive book on the financial crisis of 2008
- Names the culprits responsible for this tragedy-from financial regulators to politicians
- Shows how each bailout throughout modern history has impacted what happened in the future
- Examines why the consumer/taxpayer is left suffering in an economy of bubbles, bailouts, and possible inflation
- Ritholtz operates a hugely popular blog, www.ritholtz.com/blog
Scathing, but fair, Bailout Nation is a voice of reason in these uncertain economic times.
Synopsis
Financial heavyweight and industry pundit Ritholtz reveals how the Federal government has rewarded corporations that have taken reckless risks, and explains why the consumer is left suffering in an economy of bubbles, inflation, and a devalued dollar.
Synopsis
Bailout Nation is a scathing expose on the politicians, financial leaders, and regulators responsible for the financial crisis of 2008. Written by Barry Ritholtz, one of today's most popular economic bloggers and media commentators, the book shows how ideology has been turned on its head and how the U.S. has abandoned its capitalistic roots and morphed into Bailout Nation. Ritholtz's rogues gallery of perpetrators and enables includes Alan Greenspan, former Senator Phil Gramm, Presidents Bush and Clinton, Treasury Secretaries Robert Rubin and Larry Summers, the biggest Wall Street firms, the ratings agencies, and Washington regulators. Together these individuals and institutions created a system that allowed banks and financial institutions to operate with little or no effective oversight, reaping the rewards of their success and insuring their failures would be underwritten by taxpayers. Scathing, tough-minded and marked by a tone of outrage, Bailout Nation perfectly matches the public mood and stands alone as a searing indictment of the financial and political establishment.
Synopsis
Praise for BAILOUT NATION"A beam of enlightened thinking in a sea of delusional complacency."
—Nouriel Roubini
"If you want to know how we got into this mess, then Ritholtz's Bailout Nation is where you should begin. He chronicled the collapse from the beginning with a rare clarity, and that shines through in this book."
—Chris Anderson, author of The Long Tail
"One of the biggest myths of the great credit debacle of 2008 is that nobody saw it coming. Bull. Barry Ritholtz did. In Bailout Nation, Ritholtz throws our current travails into historical relief. For those who want to know how we got to this miserable place—and who want to have fun doing it—this is essential reading."
—Daniel Gross, Newsweek and Slate
"Highly entertaining rants against the stupidity of our biggest financial institutions. Ritholtz brings intelligence and moral outrage to this book."
—Rex Nutting, MarketWatch
"Nobody in the financial punditry world has been 'righter' about the economic crisis unfolding than Barry. If there was such a thing as a financial pundits Hall of Fame, he would have to be an inaugural inductee. Ignore Bailout Nation at your own peril."
—Tobin Smith, founder, ChangeWave Research, and Contributing Market Analyst, Fox News
"Bailout Nation provides an easily understandable and vividly descriptive road map as to how our domestic economy got into the rut we are now in ... It is a must-read for serious students of financial history ... and for all investors in bonds and stocks who want to preserve and grow their capital in the future!"
—Doug Kass, Seabreeze Partners, Real Money.com, CNBC
Synopsis
Behavioural investing seeks to bridge the gap between psychology and investing. All too many investors are unaware of the mental pitfalls that await them. Even once we are aware of our biases, we must recognise that knowledge does not equal behaviour. The solution lies is designing and adopting an investment process that is at least partially robust to behavioural decision-making errors.
Behavioural Investing: A Practitioner’s Guide to Applying Behavioural Finance explores the biases we face, the way in which they show up in the investment process, and urges readers to adopt an empirically based sceptical approach to investing. This book is unique in combining insights from the field of applied psychology with a through understanding of the investment problem. The content is practitioner focused throughout and will be essential reading for any investment professional looking to improve their investing behaviour to maximise returns.
Key features include:
- The only book to cover the applications of behavioural finance.
- An executive summary for every chapter with key points highlighted at the chapter start.
- Information on the key behavioural biases of professional investors, including The seven sins of fund management, Investment myth busting, and The Tao of investing.
- Practical examples showing how using a psychologically inspired model can improve on standard, common practice valuation tools.
Written by an internationally renowned expert in the field of behavioural finance.
About the Author
JAMES MONTIER is the global equity strategist at Dresdner Kleinwort in London. He has been the top rated strategist in the annual Extel survey for the last two years. He is also the author of Behavioural Finance, published by Wiley in 2000. James was on the 50 must read analysts list complied by the Business magazine, and was one of the Financial News' Rising Stars.
James is a regular speaker at both academic and practitioner conferences, and is regarded as the leading authority on applying behavioural finance to investment. He is also a visiting fellow at the University of Durham. James is also a fellow of the Royal Society of Arts. He has been described as a maverick by the Sunday Times, an enfant terrible by the FAZ, and a prophet by the Fast Company! When not writing or reading, he can usually be found blowing bubbles at fish and swimming with sharks.
Table of Contents
Preface xvii
Acknowledgments xxi
SECTION I: COMMON MISTAKES AND BASIC BIASES 1
1 Emotion, Neuroscience and Investing: Investors as Dopamine Addicts 3
2 Part Man, Part Monkey 17
3 Take aWalk on the Wild Side 37
4 Brain Damage, Addicts and Pigeons 47
5 What Do Secretaries’ Dustbins and the Da Vinci Code have in Common? 55
6 The Limits to Learning 63
SECTION II: THE PROFESSIONALS AND THE BIASES 77
7 Behaving Badly 79
SECTION III: THE SEVEN SINS OF FUND MANAGEMENT 95
8 A Behavioural Critique 97
9 The Folly of Forecasting: Ignore all Economists, Strategists, & Analysts 105
10 What Value Analysts? 123
11 The Illusion of Knowledge or Is More Information Better Information? 133
12 WhyWaste Your Time Listening to Company Management? 143
13 Who's a Pretty Boy Then? Or Beauty Contests, Rationality and Greater Fools 161
14 ADHD, Time Horizons and Underperformance 179
15 The Story is The Thing (or The Allure of Growth) 189
16 Scepticism is Rare or (Descartes vs Spinoza) 197
17 Are Two Heads Better Than One? 209
SECTION IV: INVESTMENT PROCESS AS BEHAVIOURAL DEFENCE 217
18 The Tao of Investing 219
PART A: THE BEHAVIORAL INVESTOR 223
19 Come Out of the Closet (or, Show Me the Alpha) 225
20 Strange Brew 235
21 Contrarian or Conformist? 247
22 Painting by Numbers: An Ode to Quant 259
23 The Perfect Value Investor 271
24 A Blast from the Past 279
25 Why Not Value? The Behavioural Stumbling Blocks 293
PART B: THE EMPIRICAL EVIDENCE: VALUE IN ALL ITS FORMS 305
26 Bargain Hunter (or It Offers Me Protection) 307
Written with Rui Antunes
27 Better Value (or The Dean Was Right!) 329
Written with Rui Antunes
28 The Little Note that Beats the Market 337
Written with Sebastian Lancetti
29 Improving Returns Using Inside Information 355
30 Just a Little Patience: Part I 367
31 Just a Little Patience: Part II 375
Written with Sebastian Lancetti
32 Sectors, Value and Momentum 387
33 Sector-Relative FactorsWorks Best 395
Written with Andrew Lapthorne
34 Cheap Countries Outperform 405
PART C: RISK, BUT NOT AS WE KNOW IT 423
35 CAPM is CRAP (or, The Dead Parrot Lives!) 425
36 Risk Managers or Risk Maniacs? 437
37 Risk: Finance's Favourite Four-Letter Word 445
SECTION V: BUBBLES AND BEHAVIOUR 453
38 The Anatomy of a Bubble 455
39 De-bubbling: Alpha Generation 469
40 Running with the Devil: A Cynical Bubble 493
41 Bubble Echoes: The Empirical Evidence 507
SECTION VI: INVESTMENT MYTH BUSTERS 519
42 Belief Bias and the Zen Investing 521
43 Dividends Do Matter 529
44 Dividends, Repurchases, Earnings and the Coming Slowdown 541
45 Return of the Robber Barons 549
46 The Purgatory of Low Returns 563
47 How Important is the Cycle? 573
48 Have We Really Learnt So Little? 581
49 Some Random Musings on Alternative Assets 587
SECTION VII: CORPORATE GOVERNANCE AND ETHICS 597
50 Abu Ghraib: Lesson from Behavioural Finance and for Corporate Governance 599
51 Doing the Right Thing or the Psychology of Ethics 611
52 Unintended Consequences and Choking under Pressure: The Psychology of Incentives 631
SECTION VIII: HAPPINESS 645
53 If It Makes You Happy 647
54 Materialism and the Pursuit of Happiness 655
References 667
Index 677