http://www.loc.gov/mods/v3 http://www.loc.gov/standards/mods/v3/mods-3-2.xsd
imperfect markets and inept central bankers
1 online resource (x, 246 pages, 32 unnumbered pages of plates) : illustrations (some color), charts, plates
In Wall Street revalued, leading analyst and bestselling author of Valuing Wall Street, Andrew Smithers presents a new way to value asset prices. Indifference to overvalued asset prices by investors, central banks and much of the financial press is the root cause of the current crisis. Bubbles in stock markets, house prices and financial assets cause huge damage when they fall, not only to their owners, but also to the world economy. An understanding of how to value assets is thus vital for managing the economy as well as for investors. This book explains how assets can be valued and shows how much incorrect and inaccurate information is published on the subject and how to spot this. Among investment bankers and financial journalists the two most common claims to value are, as Andrew shows, unadulterated lies. One of these is that "Shares are cheap given the level of current (or forecast) PE multiples" and the other is that "Shares are cheap relative to interest rates." Andrew also explains how asset prices affect the economy and how central banks lose their ability to stabilise it when bubbles collapse. The denial that markets can be valued has caused great damage. Markets are not perfectly efficient, nor are they are irrational casinos. This book sets out a new model for understanding the limited efficiency of financial markets, which is the key condition for improving investment and economic management today.
Introduction -- Synopsis -- Interest rate levels and the stock market -- Interest rate changes and share price changes -- Household savings and the stock market -- A moderately rather than a perfectly efficient market -- The efficient market hypothesis -- Testing the imperfectly efficient market hypothesis -- Other claims for valuing equities -- Forecasting returns without using value -- Valuing stock markets by hindsight combined with subsequent returns -- House prices -- The price of liquidity -- the return for holding illiquid assets -- The return on equities and the return on equity portfolios -- The general undesirability of leveraging equity portfolios -- A rare exception to the rule against leverage -- Profits are overstated -- Intangibles -- Accounting issues -- The impact of q -- Problems with valuing the markets of developing economics -- Central banks' response to asset prices -- The response to asset prices from investors, fund managers and pension consultants -- International imbalances -- Summing up -- Appendix 1: Sources and obligations -- Appendix 2: Glossary of terms -- Appendix 3: Interest rates, profits and share prices by James Mitchell -- Appendix 4: Examples of the current (trailing) and next year's (prospective) PEs giving misleading guides to value -- Appendix 5: Real returns from equity markets comparing 1899-1954 with 1954-2008 -- Appendix 6: Errors in inflation expectations and the impact on bond returns by Stephen Wright and Andrew Smithers -- Appendix 7: An algebraic demonstration that negative serial correlation can make the leverage of an equity portfolio unattractive -- Appendix 8: Correlations between international stock markets.
Includes bibliographical references and index.
Chichester, West Sussex, UK : Wiley, 2009