Showing posts with label Economy. Show all posts
Showing posts with label Economy. Show all posts

Sunday, September 1, 2013

Economic theory and mutual funds


A few more decent books on economy :

* For those who wish to understand better why our intuition about standard economic theories being wrong is correct : "How Markets Fail" by John Cassidy. [Summary : the invisible hand does not automatically take into account all types of global social effects on and in society.]

* Extremely useful for anybody who considers investing in (mutual) funds: "Common Sense on Mutual Funds" by John Bogle. [Summary : invest in low cost index funds.]

Saturday, June 1, 2013

Absolute numbers and ratios : macro economic data


A few economic orders of magnitude :

Gross World Product : 70 trillion US$.

Growth rates since 2006 : 5 (2006), 5, 3 ,-0.5, 5.3, 3.9, 3.5 (2012) (in percent)

Gross Domestic Product by Country in US$:

EU            16.5 trillion
US              15 trillion
China           7 trillion
Japan            6 trillion
Germany   3.5 trillion
France       2.8
Brasil        2.5
UK            2.5
Italy           2.2
India          1.9
Russia       1.9

Real growth rates (adjusted for inflation) for Western countries is between zero and 2.5.
For developping countries it can reach much higher numbers.

US inflation rates between 1914 and 2013 were between -10.5 and 18 percent on a yearly basis. (Negative inflation rates are rare.) In recent history it was 13.5 % in 1980 and -0.4 % in 2009. The last thirty years it has typically been close to 3%.

US market cap       : 18 trillion.
France market cap : 1.8 trillion.
Germany                : 1.5 trillion.

One measure of market valuation is the comparison between total market capitalization and GDP. Between 1970, this measure has fluctuated between 35 and 150 %. It is presently 110% for the US.
For France, for instance, it is much lower. (~ 65%). For Germany ~ 43%.

Price to Earnings Ratio (PER) for the US stock market for the last hundred years was between 5 and 45. Until 1990 it seemed to be around 15 (with large fluctuations). Taking also into account the highs of recent decades, it seems to be around 18 (with large fluctuations). It is presently at 21.37. PER seems inversely correlated with long terms interest rates which are at a historical low of 2%. (These long terms interest rates have been fluctuating between 2 and 16 % over the last hundred years with a baseline of around 4%.) PER DAX : 20, CAC : 23, S&P 500 : 19. (Note how this measure gives a
different picture than total market cap divided by GDP.)

Yet More Books on Mister Market


A few more books :

Excellent   : Barbarians at the Gate by Burrough and Helyar.

Interesting : The Snowball (Warren Buffett biography) by Alice Schroeder
                    Common Stock and Uncommon Profist by Philip Fisher

Average     : The End of Wall Street by Roger Lowenstein


Friday, November 16, 2012

More Books on Mister Market

More decent books on Value Investing:

You can be a stock market genius, Joel Greenblatt
Value investing, Bruce Greenwald et al.

A very entertaining read on the sociology and inner workings of the markets and market contrarians:

The Big Short by Michael Lewis

Sunday, September 30, 2012

Books on the Sociology and History of Wall Street


I found the following fascinating informative reads (in order of quality of writing
and  non-trivial content) -- these are books on the sociology, history and development of
contemporary capital markets and firms:

Lords of Finance, Ahamed.
Keynes biography, Skidelsky.
Liars Poker, Lewis.
When Genius Failed,  Lowenstein.
What's wrong with Wall Street, Lowenstein.


Books on Value Investing


In order of importance :

The Intelligent Investor, Graham.
Security Analysis, Dodd and Graham.
The Essays of Warren Buffett, Buffett et al. 
Margin of Safety,  Klarman.
One up on Wall Street, Lynch.

There is surprisingly little decent literature on the subject.