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Unexpected Returns: Understanding Secular Stock Market Cycles (Hardcover)
by Ed Easterling
| Category:
Financial market & stock market, investing |
| Market price: ¥ 398.00
MSL price:
¥ 378.00
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| Stock:
Pre-order item, lead time 3-7 weeks upon payment [ COD term does not apply to pre-order items ] |
MSL rating:
 Good for Gifts |
| MSL Pointer Review:
This book is a penetrating analysis of a century's stock market experience and a realistic guide to what market is expected to perform in the years ahead. |
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Author: Ed Easterling
Publisher: Cypress House
Pub. in: April, 2005
ISBN: 1879384620
Pages: 296
Measurements: 9.1 x 6 x 1.2 inches
Origin of product: USA
Order code: BA00855
Other information: ISBN-13: 978-1879384620
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- MSL Picks -
The stock market's phenomenal rise from 1982-1999 and equally impressive fall beginning in 2000 naturally led many to question the buy-and-hold, "stocks for the long run" conventional investing wisdom of the 1990's. Among the questions: do secular bull and bear markets really exist, and how long do they last? Can we know what causes them? Are they predictable? Can we know which market phase we are experiencing now? If so, what practical benefit does that provide us in forming an investment strategy and making investment decisions?
These are all timely and important questions, and a new book, Unexpected Returns by Ed Easterling, is one of the most elegantly structured treatments of this subject, presented with clear historical data to back up the arguments. The surprising thing is how much the average investor experience depends upon stock prices relative to earnings or dividends, and whether these multiples expand or contract during a given investment period. There is a wonderful chart on page 80 of Unexpected Returns that shows just how much investors are dependent upon changes in P/E ratios, not earnings growth, over time for their returns. Easterling shows clearly that the best environment for P/E ratios is when inflation is low and stable and approaches price stability. The further conditions stray from this low-inflation, price stability environment, the greater the downward pressure on P/E ratios. Historically, the highest levels of inflation (such as those experienced in the 1970's) and the most extreme examples of deflation (such as that in the early part of the 20th century in the U.S.) correspond with historically low P/E ratios.
One of the strongest points emphasized by the book is that interest rates and inflation have never been stable for long, and the recent condition of low inflation price stability is a historical anomaly. As long as the current benevolent inflation / interest rate environment lasts, stocks can support P/E ratios in the low 20's; the sooner it changes, and the more drastically, the farther P/E ratios will have to fall. The evidence, as Easterling lays it out, makes it far more likely that the stock market's nice performances in 2003 and 2004 represent nothing more than a typical bear market rally than the beginning of a new bull market. Stock prices and interest rates similar to those prevailing today have historically marked the ends of bull markets, not their beginnings. The recognition of the conditions of a secular bear market requires a different investment strategy than does a bull market - as Easterling would say, row, don't sail.
Unexpected Returns is compact, highly readable, and offers compelling historical evidence for the inevitability of secular bull and bear markets, what drives them, and the clear signals that can be used by enlightened investors to determine the prevailing market cycle in order to improve results in any market environment.
- From quoting Zeke Ashton
Target readers:
Business people and investors.
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Ed Easterling is the founder and President of Crestmont Holdings, an investment management and research firm. Crestmont manages hedge fund portfolios and publishes provocative research on the financial markets at www.CrestmontResearch.com. Crestmont's investment approach concentrates on niche hedge funds across a broad variety of styles located primarily in the State of Texas. Mr. Easterling is the author of Unexpected Returns: Understanding Secular Stock Market Cycles, a contributing author to Just One Thing (John Wiley & Sons; 2005), and he co-authored chapters in Bull's Eye Investing by John Mauldin. In addition, he is a member of the adjunct faculty at SMU's Cox School of Business in Dallas, Texas where he teaches the course on alternative investments and hedge funds for MBA students.
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From the publisher
Why is the stock market acting differently in the 2000s than in the 1980s and 1990s?
Before you read any how-to investment books or seek financial advice, read Unexpected Returns, the essential resource for investors and investment professionals who want to understand how and why the financial markets are not the same now as they were in the 1980s and 1990s. In addition to explaining the fundamentals, this book takes you on a graphic journey through the seasons of the market, tying together economics and finance to explain the stock market's cycles. Using comprehensive full-color charts and graphs, it offers an in-depth exploration of what has changed over the past five years - and what you can do about it to avoid disappointment with your investments. This unique combination of investment science and investment art will enable you to differentiate between irrational hope and a rational view of the current financial markets. Based on years of meticulous research, it provides the sensible conclusions that will drive your future investment choices and give you the confidence to rely on your investment outlook, whatever your financial strategy.
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| View all 8 comments |
Harvey Rosenblum (MSL quote), Senior Vice President and Director of Research, Federal Reserve Bank of Dallas
<2007-06-18 00:00>
Unexpected Returns provides a broad, deep, and provocative exploration of the factors that determine stock market investment returns over a person's lifetime. Of special interest to me, as a Federal Reserve policy advisor on monetary policy, is Easterling's exploration of the critical role of low and stable inflation as a key determinant of stock market performance. |
Bill Mann (MSL quote), Senior Editor, Investing, The Motley Fool
<2007-06-18 00:00>
The stock market is one of the few places on earth where people become more excited to buy when things are expensive, and more anxious to sell when things are cheap. Ed Easterling has penned a masterful accounting about why this is so wealth-destructive, presented without preconceived notion or bias. |
Shell (MSL quote), USA
<2007-06-18 00:00>
As an investment advisor employing both fundamental and technical analysis, the "Secular Bear Market" seems to me an obvious theme. Major stock market indexes are currently as low as they were in 1998. Six years of a secular bear market and most investors are still using the same strategies that worked in the rising markets of the `90's (buy and hope). This trend is nothing new; stocks have cycled 8 times from upward to sideways, over and over, about every two decades since the 1901. Traditional "buy and hold" relative return strategies rely on the direction of the markets. They enjoy gains when they occur, suffer loses when the market declines, and require a long time horizon that many investors don't have. Skill-based tactical strategies seek gains regardless of market direction using investment manager skill in sector rotation, hedging strategies, and risk management. As Ed says in the book, when the wind is blowing we can let out the sails and enjoy the ride. When the wind stops blowing, you can sit there and wait the wind to come again, or you can get out the ores and start rowing. Based on current technical and fundamental research, it seems the wind may not cast our sails and the ores are now necessary to get where we want to go. This book is truly a remarkable account of the markets history. Very well written and compelling research that all investors must understand. |
Ward (MSL quote), USA
<2007-06-18 00:00>
Easterling does a magnificent job of explaining secular bull and bear markets, how they have acted in the past and what we might expect going forward. Many people in the industry try to tell investors that this time is different and point to long term market averages, but Easterling shows why this is misleading at best and backs it up with meticulous research. The key to making money is not to loose money and knowing what to expect from market cycles will help investors navigate the turbulent waters. Risk management can be adjusted to improve the probability of every investor's success. This is a must read for investment managers and their clients. |
View all 8 comments |
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