Market-price-of-risk

This book is definitely not worth its price. Basic option theory and knowledge on VAR is wrongly interpreted. The book gives no insight on what energy risk management realy stands for. Utterly disappointed !

This book provides an excellent background and review in easy to understand language about energy trading and energy risk management. I highly recommend it for understanding the basics of this complex subject. It also provides a global overview of market developments. It is not, however, a quantative treatise on energy and financial derivatives. This is a primer that should be viewed as such.Fusaro's second, Energy Derivatives: Trading Emerging Markets, is the companion piece to this book and adds the newer commodities of weather, emissions, bandwidth and coal derivatives. I recommend it as well.

Until Peter Fusaro's book "Energy Risk Management" hit the bookstores in 1998, anyone needing a clear explanation of how risk is managed in the energy markets had to sift through numerous trade publications and journals.

This was genergally the reaction of any industry participant I spoke to, independently of whether they were clients, students or collegues of mine both from the Energy community or from academia. Therefore, with this feedback, I would strongly encourage my collegues to read Peter Fusaro's new book "Energy Derivatives: Trading Emerging Markets" which he edited with Jeremy Wilcox and was published in October of this year. In this book Peter Fusaro and his team of energy professionals take the reader deeper into the secondary markets (energy derivatives, etc.) which have emerged as a result of the deregulation process of the Energy Industry and, most importantly, the book explains how to use these markets to manage energy risk. Further, in chapter 3, 4, 5 and 6 the reader is introduced to the concept of interdependency among energy markets and other related markets. These include weather and weather derivatives, emission trading and bandwidth - the most recently emerging market converging with Power to become the backbone of the new global economy. This is the first book to address the complex topic of convergence of power and the rapidly growing bandwidth market. For this reason alone this book becomes a must for everyone who is interested in becoming a part of the evolving energy market.

The real dillema regarding ERP is that the real ex-post ERP is irrationally different from the the ex-ante ERP required for CAPM valuations. Prof. Cornell does explore this issue well for a general audience. However, this book does not diminish my skepticism of CAPM equilibrium valuations and ex-ante ERP estimators.

The author, Professor Bradford Cornell, gives an analytical, yet very readable, explanation and forecast of the decline of the stock market during the past couple of years. In this regard Professor Cornell makes a similar conclusion about the value of equtiies and slightly earlier than did Robert J. Shiller in his book, Irrational Exuberance. It is unfortunate that Professor Cornell and his book did not get the same attention that was accorded to Professor Shiller at the start of the stock market decline.

The thesis of the book is that the equity risk premium for stocks, which is the compensation given to equity investors for holding shares of risky common stocks, was below, perhaps much below, what was historically normal. This implied that investors came to view common stocks as being a much less risky investment than stocks had been in the past. Indeed, a quite common view of many investors before the recent fall in the stock market was the view that common stock were an appropriate vehicle for "savings" rather than just for "investment." The implication of this perception by some investors is that equities in general were likely to continue to rise in price over time and thus represented a "safe" or at least low risk vehicle for discretionary income that was not spent.

However, periods of relative low perceived risk usually do not last and are followed by periods of relatively higher perceived risk. The current period we are now in appears to be one in which the uncertainties regarding the stock market have increased and thus investors are now demanding greater compensation, that is, a higher risk premium, for bearing those uncertainties.

The reason the book does not get five stars is that the book misspecifies the constant dividend growth model equation that forms the basis for the author's explanation of the adjustment in the equity risk premium. However, this oversight should not prevent the reader from getting a great explanation of how the prices of common stocks adjust to risks from this fine book.

This book, with its many references, is a great guide to the academic literature on stock valuation. It was easy to read, very logical, and educational.

I was hoping for better when I obtained the book. I can't believe this guy (the author) went to U.C. Some of the ideas that he presents are interesting and worthwhile to pursue, but he does a poor job of presenting them. The author took bits from each class that he attended at U.C. and forced them into an incoherent story. Many of the equations that he introduces are plain wrong, e.g., (2.7), (2.8), etc. Those that are correct (2.11) are presented in a most obtuse way so that one is left wondering: "what is Simons' talking about". For those who are not technically inclined this is a travesty. How are they supposed to differentiate the baloney from the fact. I understand that this is a "traders' book", but there are many better ones out there! Come on Howard, come on Wiley, you can do better than this.

Howard Simons' book is a tremendous resource for beginners and market professionals alike. I don't know who this jerk is who panned the book, but he obviously has no idea what he is talking about and ,furthermore, is completely incorrect in his criticisms. All of the equations in this book are correct.

Simons book goes beyond the obvious "how do" on options -- which is exactly where more writers leave off. He is able to take very obtuse institutional topics like behavioral analysis and apply them to intermarket analysis. This is an excellent book for the more sophisticated trader who wants to learn more about options trading in all markets, including futures. Great read and well worth the price.

This text offers absolutely nothing. It is either far too simplistic or misses chunks of valuable detail.

There are far better introductions to the energy markets (e.g. Stephen Errera's Trading Energy Futures & Options or Peter Fusaro's Energy Risk Management) - buy one of these instead!

Patronizing style and too many mentions of his wife's book. Poor content - give it a miss.

"Managing Energy Risk" gave me the information I needed to answer technical questions about energy risk in an actual job interview. My answers must have been good because I was offered and happily accepted an energy risk management position! This is a great introduction and summary of energy risk management, which I believe was intended for managers and others like myself who just want a thorough overview. Several technical concepts are discussed in this book, but the author leaves the gory details for other sources. Among other things this book covers: 1) the current status of the electric power industry and a brief historical perspective, 2) risk management policies and procedures, 3) the different players involved in energy risk management, and 4) the foundations, basics, and some of the peculiarities of energy risk management. I recommend this book to anyone looking for a solid foundation in energy risk management.