Why Going Against the Grain Pays.


There are only two rules every investor needs to know:

1.) The market is always efficient.

2.) The “street” and the “market” are two separate and very different things.

This book is a wonderful recounting of the follies of the street. They did not start yesterday, they will not end tomorrow and no legislation from the Ten Commandments to the Security and Exchange act of 201? will ever be enough to protect you from them.

Common sense goes 99% of the distance as a good advisor allowing prudent investors to protect themselves from the fads and follies of the investment markets and become what the authors call “private” investors rather than being taken in by the public spectacle. The book was written before the current financial debacle but its history lessons are timeless and its program will be sound for a long time to come.

 

Mobs, messiahs, and markets : surviving the public spectacle in finance and politics Hoboken, N.J. : John Wiley & Sons, c 2007      William Bonner and Lila Rajiva Finance  Corrupt practices Hardcover. 1st ed. and printing. viii, 424 p. : ill. ; 24 cm. Includes bibliographical references (p. 391-412) and index. Clean, tight and strong binding with clean dust jacket. No highlighting, underlining or marginalia in text. VG/VG

Bestselling author Bill Bonner has long been a maverick observer of the financial and political world, sharpening his sardonic wit, in particular, on the vagaries of the investing public. Market booms and busts, tulip manias and dotcom bubbles, venture capitalists and vulture funds, he lets you know, are best explained not by dry statistics and obscure theories but by the metaphors and analogies of literature.

Mobs, Messiahs, and Markets uses literary economics to offer broader insights into mass behavior and its devastating effects on society. Why is it, they ask, that perfectly sane and responsible individuals can get together, and by some bizarre alchemy turn into an irrational mob? What makes them trust charlatans and demagogues who manipulate their worst instincts? Why do they abandon good sense, good behavior and good taste when an empty slogan is waved in front of them. Why is the road to hell paved with so many sterling intentions? Why is there a fool on every corner and a knave in every public office?

In attempting an answer, the authors weave a light-hearted journey through history, politics and finance to show group think at work in an improbable array of instances, from medieval crusades to the architectural follies of hedge-fund managers. Their journey takes them ultimately to the desk of the chairman of the Federal Reserve Bank and to a cautionary tale of the current bubble economy. They warn that the gush of credit let loose by Alan Greenspan and multiplied by the sophisticated number games of Wall Street whizzes is fraught with perils for the unwary.

Boom without end, pronounces The Street. But Bonner and Rajiva are more cynical. When the higher math and the greater greed come together, watch out below!

Mobs, Messiahs, and Markets ends by giving concrete advice on how readers can avoid what the authors call the ‘public spectacle’ of modern finance, and become, instead, ‘private’ investors – knowing their own mind and following their own intuitions. The authors have no gimmicks to offer here – but instead give a better understanding of the dynamics of market behavior, allowing prudent investors to protect themselves from the fads and follies of the investment markets.

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