market-economics

From my personal perspective, just the author's various scanning methods and scenario building methodology (with case studies) as well as information resources outlined in his book are already worth the price you pay for the book.

Most entreprenuers-authors talk about environmental scanning (a very important input part of strategic thinking process) but often do not share their tactical approaches. This author does very well and quite in depth. Also, he outlines the scenario building process (a seemingly complex thinking process according to several business/management books) in only 7 simple steps. He has a website which readers can access using a password code given in the book but unfortunately his does not have much new stuff other that what is already in the book.

The book is also interspersed with insightful interviews with leading thinkers, whose books I have also enjoyed reading, e.g. Alvin Toffler, Richard Saul Wurman, Thoedore Modis, and Andrew Garvin.

On the whole, this is a very light, easy-to-read and no-frills book, and I strongly recommend it to all entrepreneurs and intrapreneurs.

This book, originally published in the late 1980's, contains a number of essays on a variety of issues from economists, scholars and free-market defenders. It features

luminaries of the Austrian school such as Mises, Reed, Rothbard, Skouson. Also, the paleolibertarian Congressman of Texas, Dr. Ron Paul offers his perspective in essays such as "The Coming World Bank" and "The Case for Free Trade." Moreover, Lew Rockwell, the editor, also offers some fresh perspectives.

Wide-ranging issues such as: banking, economic myths & fundamentals, fiat money vs. the gold standard, free trade vs. protectionism, privatization and socialism, etc. Plus a salute to the great economists of the Austrian school of economics.

Moreover, it seems this book has gone out-of-print. You might want to search for it on a used book search like half.com if you don't have any luck with Amazon's used book service. Though, I've seen it available every now and again.

He draws his empirical evidence primarily from the UK (a key country) and Japan (which is still resisting full liberalization) - while also focussing on the telecoms and financial services sectors.

He has a chapter analysing developments in all the other key economies.

Although it would have been good if he could have given developments in the USA as much space as he gives the UK and Japan, there is enough material in this rich book to satisfy anyone interested in the relationship between economic liberalization and new regulatory needs.

Maybe it is the best basic and useful text about Future Markets ever written. It is very well divided, the exposition is clear, and relevant problems are discussed. Therefore I recommend it for all those who wish to begin to study future markets.

Duffie begins explaining how future markets work - this is really basic. Then he explores the concept of hedge, and how to calculate it - by minimum variance, for example. The important things are how to chain the contracts, and, mainly, how to calculate the hedge when the change in prices is calculated in absolute or in relative terms (this is hard to learn and understand intuitively, but Duffie makes it easy - that's why it is a brilliant topic.)

Concepts such as utility function, martingal, risk aversion and others are explored, nonetheless they are not so difficult if the reader has been already introduced to them.

This book satisfies its promise of being a clearly-written introduction to investing in overseas markets. I've read a lot of investing books recently which claim to offer contrarian investment strategies that will allow you to beat the market by going against the crowd. No other book has made it easier to understand how country funds operate, where they are traded, and what your best choices will be.

This book delivers sound and practical advice, but still manages to keep the reader entertained through the use of humor and analogy. I liked it because it appealed to my common sense with just the right blend of technical language and simple terminology. It should appeal to investors at just about every level. I haven't seen many books on this topic (which is sure to become a hot one)...but I expect the style and clarity of this book will make it a standard item on the smart investor's bookshelf.

One of the author's tips is that people don't buy rooms and appliances, they buy something that rings a deep emotional bell. He talks about how to find that bell for your house, and how to ring it for the prospective buyer.

We loved our house because we set it up for quality time with our kids. We decided to ring that bell. We took out a ratty breakfast bar from the kitchen and replaced it with an old oak table and chairs. The house had an add-on bedroom you could only get to through another bedroom. We changed the middle room into a library with bookshelves filled with childrens books. Instead of tearing down the treehouse we spruced it up. We put wooden toys on the workbench in the shed. Everything said, "quality time with the kids." It worked. This is just one of the great tips. There are so many more we couldn't begin to use them all.

Pension funds will experience rising negative cash flows as their benefit claims will surpass their contributions. In the U.S. for defined benefit pension plans, Schieber and Shoven forecast that the gap between benefit claims and contributions will deepen from - 1.5% of payroll in 2040 to - 4% in 2065.

Regarding precise equity return outlook there is little consensus. The study from Schieber and Shoven forecasts that real equity returns will decline from an historical 8% down to 5%. Another study by Jan Mantel from Merrill Lynch claims that equities will not decrease in price throughout the retirement of the baby boomers. But, he did not express by how much equity returns would decline if equity prices grow at a slower than historical rate. Other economists forecast worse scenarios including bear markets lasting decades.

There are three factors that will negatively affect equities. The first one, as mentioned, is the baby boomers selling their stock holdings throughout their retirement years. The second one is the pension funds changing their investment mix away from equities towards bonds and cash to meet upcoming liabilities associated with retirees. Mantel forecasts that between 2000 and 2050 pension funds will reduce their equity allocation from 72% to 60% of investments in the U.K, from 63% to 54% in the U.S., from 45% to 30% in the Netherlands, and from 40% to 28% in Japan. Because these four countries account for 80% of the World's private defined benefit pension assets, this shift in investment mix will represent a huge downward pressure on equity prices. The third factor is an anticipated increase in worldwide interest rates associated with a rapid increase in government borrowing through the industrialized World to support government retirement systems and elders healthcare benefits. Governments worldwide are ill prepared for the funding of these liabilities. Roseveare, an OECD economist, predicts government debt will reach staggering levels by 2030, and represent 339% of GDP in Japan, over 200% throughout the EU, and 115% in the U.S. These debt levels are a multiple of current levels.

Reviewing the investment outlook for the second quarter of this century (2025 to 2050), we derive the following:

1)Equity prices and returns will be affected by a decrease in demand;
2)International equities should fare worse than U.S. ones because both the EU and Japan have more rapidly aging population and have weaker fiscal position associated with higher government debt level;
3)Bond prices and returns will be affected by a staggering increase in supply due to rising government debt. International bonds will be more vulnerable for the same reason as for equities;
4)Real estate will be affected by a declining demand associated with lower demographic growth and lower rate of household formation;
5)All medium to long term investments will be affected by a rise in real interest rates associated with a huge increase in government borrowing throughout the industrialized World to support government programs aimed at retirees.

There are several moderating factors that may reduce the impact of global aging. However, these arguments are not convincing. The first one is that all the above predictions regarding pension plans are associated with defined benefit plans where a pension fund pays a predetermined annuity to retirees. Apparently, the more modern defined contribution plans (401K) would have a different and more robust cash flow than defined benefit plans. Retirees would not draw down on their 401K holdings as quickly. This makes sense, but the dollar amounts in defined contribution plans worldwide is small compared to defined benefit plans.

The most intriguing economic argument that would counteract the negative impact of global aging relates to equities demand and supply equilibrium. If equities prices decline because of global aging, the cost of equity capital will go up for corporations. As a result, corporations will issue less equity and instead finance growth with bonds. Thus, the supply of equity will decrease and match the reduced demand for equity. And equity returns and prices ultimately will not be affected by global aging.

Unfortunately the demand and supply equilibrium argument is flawed. The reduction in equity supply, as depicted, will be minimal compared to the reduction in equity demand associated with pension funds selling equities both to meet retirees benefits and to shift their portfolio mix towards bonds. Also, for corporations to steadily finance their growth through bond financing will further jack up real interest rates. This is due to increasing bond supply and increasing the credit risk premium on corporate bonds. This increase in real interest rates will hurt both bonds and equities.