Stocks for the Long Run : The Definitive Guide to Financial Market Returns and Long-Term Investment Strategies
, by Siegel, Jeremy J.Note: Supplemental materials are not guaranteed with Rental or Used book purchases.
- ISBN: 9781556238048 | 1556238045
- Cover: Hardcover
- Copyright: 1/1/1994
This book combines a compelling and timely portrait of today's turbulent stock market with the strategies, tools, and techniques investors need to maintain their focus and achieve meaningful stock returns over time.
Foreword | p. xv |
Preface | p. xix |
Acknowledgments | p. xxiii |
The Verdict of History | |
Stock and Bond Returns Since 1802 | p. 3 |
"Everybody Ought to Be Rich" | p. 3 |
Financial Market Returns from 1802 | p. 5 |
Historical Series on Bonds | p. 7 |
The Price Level and Gold | p. 9 |
Total Real Returns | p. 11 |
Interpretation of Returns | p. 12 |
Real Returns on Fixed-Income Assets | p. 14 |
The Fall in Fixed-Income Returns | p. 15 |
Equity Premium | p. 16 |
International Returns | p. 18 |
Conclusion | p. 22 |
Stocks from 1802 to 1871 | p. 23 |
Arithmetic and Geometric Returns | p. 24 |
Risk, Return, and Portfolio Allocation | p. 25 |
Measuring Risk and Return | p. 25 |
Risk and Holding Period | p. 26 |
Investor Holding Periods | p. 29 |
Investor Returns from Market Peaks | p. 30 |
Standard Measures of Risk | p. 32 |
Correlation between Stock and Bond Returns | p. 34 |
Efficient Frontiers | p. 36 |
Recommended Portfolio Allocations | p. 37 |
Inflation-Indexed Bonds | p. 39 |
Conclusion | p. 41 |
Stock Indexes | p. 43 |
Market Averages | p. 43 |
The Dow Jones Averages | p. 44 |
Computation of the Dow Index | p. 45 |
Value-Weighted Indexes | p. 48 |
Worldwide Rank of Individual Firms | p. 52 |
Transformation of S&P 500 Index | p. 52 |
Return Biases in Stock Indexes | p. 54 |
What Happened to the Original 12 Dow Jones Industrials? | p. 55 |
The Impact of Taxes on Asset Returns | p. 57 |
Historical Taxes on Income and Capital Gains | p. 58 |
A Total After-Tax Returns Index | p. 58 |
The Benefits of Deferring Capital Gains Taxes | p. 61 |
Inflation and the Capital Gains Tax | p. 62 |
Increasingly Favorable Tax Factors for Equities | p. 64 |
Stocks or Bonds in Tax-Deferred Accounts? | p. 66 |
Conclusion | p. 67 |
History of the Tax Code | p. 68 |
Perspectives on Stocks as Investments | p. 71 |
Early Views of Stock Investing | p. 73 |
Influence of Smith's Work | p. 74 |
Common Stock Theory of Investment | p. 76 |
A Radical Shift in Sentiment | p. 76 |
Postcrash View of Stock Returns | p. 77 |
The Cult of Equities | p. 79 |
The Technology Boom | p. 82 |
Legacy of the Bull Market | p. 83 |
Valuation, Future Stock Returns, and Style Investing | |
Sources and Measures of Stock Market Value | p. 87 |
An Evil Omen Returns | p. 87 |
Valuation of Cash Flows from Stocks | p. 89 |
Sources of Shareholder Value | p. 90 |
Does the Value of Stocks Depend on Dividends or Earnings? | p. 92 |
Long-Term Earnings Growth and Economic Growth | p. 93 |
Historical Yardsticks for Valuing the Market | p. 95 |
Earnings Definitions and Controversy | p. 98 |
Book Value, Market Value, and Tobin's Q | p. 100 |
Market Value Relative to GDP | p. 103 |
The Fed Model of Market Valuation | p. 104 |
What Do These Valuation Measures Show? | p. 107 |
The Great Bull Market, the New Economy, the Age Wave, and Future Stock Returns | p. 111 |
The New Economy and Earnings Growth | p. 112 |
Corporate Profits and National Income | p. 112 |
Profits in the New Economy | p. 115 |
Factors Raising the Valuation Ratios | p. 115 |
The Equity Premium | p. 121 |
Future Equity Returns | p. 122 |
Terrorism | p. 124 |
The Age Wave | p. 125 |
Solutions to the Age Wave Crisis | p. 128 |
Conclusion | p. 129 |
Large Stocks, Small Stocks, Value Stocks, Growth Stocks | p. 131 |
Outperforming the Market | p. 131 |
Risks and Returns in Small Stocks | p. 132 |
Trends in Small Stock Returns | p. 133 |
Value-Based Criteria | p. 136 |
Value and Growth Stocks | p. 137 |
Nature of Growth and Value Stocks | p. 141 |
Dividend Yields | p. 141 |
Distressed Firms | p. 142 |
Initial Public Offerings | p. 143 |
Investment Strategy | p. 144 |
Valuation of Growth and Technology Stocks | p. 147 |
The Nifty Fifty of the 1970s | p. 150 |
Evaluation of Data | p. 153 |
What Was the Right P-E Ratio to Pay for the Nifty Fifty? | p. 153 |
Earnings Growth and Valuation | p. 154 |
Returns of High and Low P-E Nifty Fifty Stocks | p. 155 |
Justified P-E Ratios for Individual Stocks | p. 156 |
Conclusion | p. 160 |
Corporate Changes in the Nifty Fifty Stocks | p. 161 |
Global Investing | p. 163 |
Cycles in Foreign Markets | p. 164 |
Diversification in World Markets | p. 168 |
Hedging Foreign Exchange Risks | p. 174 |
Hedging in the Short Run | p. 175 |
The Emerging Market Crisis of 1998 | p. 176 |
Aftermath of Crisis | p. 178 |
Conclusion | p. 179 |
Economic Environment of Investing | |
Gold, the Federal Reserve, and Inflation | p. 183 |
Money and Prices | p. 184 |
The Gold Standard | p. 186 |
Establishment of the Federal Reserve | p. 187 |
Fall of the Gold Standard | p. 187 |
Postdevaluation Policy | p. 188 |
Postgold Monetary Policy | p. 190 |
The Federal Reserve and Money Creation | p. 191 |
How the Fed Affects Interest Rates | p. 191 |
Fed Policy Actions and Interest Rates | p. 192 |
Stocks as Inflationary Hedges | p. 194 |
Why Stocks Fail as a Short-Term Inflation Hedge | p. 195 |
Fed Policy, the Business Cycle, and Government Spending | p. 198 |
Inflation and the U.S. Tax Code | p. 198 |
Conclusion | p. 201 |
Stocks and the Business Cycle | p. 203 |
Who Calls the Business Cycle? | p. 204 |
Stock Returns around Business Cycle Turning Points | p. 207 |
Gains through Timing the Business Cycle | p. 210 |
How Hard Is It to Predict the Business Cycle? | p. 211 |
Conclusion | p. 214 |
World Events That Impact Financial Markets | p. 215 |
September 11, 2001 | p. 215 |
What Moves the Market? | p. 217 |
Uncertainty and the Market | p. 220 |
Democrats and Republicans | p. 221 |
Stocks and War | p. 224 |
Conclusion | p. 228 |
Reactions of Financial Markets to Economic Data | p. 229 |
Economic Data and the Market | p. 231 |
Principles of Market Reaction | p. 231 |
Information Content of Data Releases | p. 232 |
Economic Growth and Stock Prices | p. 233 |
The Employment Report | p. 234 |
The Cycle of Announcements | p. 235 |
Inflation Reports | p. 237 |
Impact on Financial Markets | p. 238 |
Central Bank Policy | p. 239 |
Conclusion | p. 239 |
Stock Fluctuations in the Short Run | |
Spiders, Cubes, Futures, and Options | p. 243 |
Exchange-Traded Funds | p. 244 |
Stock Index Futures | p. 245 |
The Impact of Index Futures | p. 247 |
Basics of Futures Markets | p. 248 |
Index Arbitrage | p. 251 |
Predicting the New York Open with Globex Trading | p. 253 |
Double and Triple Witching | p. 254 |
Margin and Leverage | p. 255 |
Using ETFs or Futures | p. 256 |
Comparing ETFs, Futures, and Index Mutual Funds | p. 256 |
Index Options | p. 258 |
Buying Index Options | p. 260 |
Selling Index Options | p. 261 |
Long-Term Trends and Stock Index Futures | p. 261 |
Market Volatility | p. 263 |
The Stock Market Crash of October 1987 | p. 265 |
Causes of the Stock Market Crash | p. 267 |
Exchange-Rate Policies | p. 267 |
The Stock Market Crash and the Futures Market | p. 269 |
Circuit Breakers | p. 270 |
The Nature of Market Volatility | p. 271 |
Historical Trends of Stock Volatility | p. 272 |
VIX: The Volatility Index | p. 275 |
Distribution of Large Daily Changes | p. 277 |
The Economics of Market Volatility | p. 279 |
Epilogue to the Crash | p. 280 |
Technical Analysis and Investing with the Trend | p. 283 |
The Nature of Technical Analysis | p. 283 |
Charles Dow, Technical Analyst | p. 284 |
Randomness of Stock Prices | p. 285 |
Simulations of Random Stock Prices | p. 286 |
Trending Markets and Price Reversals | p. 288 |
Moving Averages | p. 289 |
Testing the Dow Jones Moving-Average Strategy | p. 290 |
The Nasdaq Moving-Average Strategy | p. 294 |
Distribution of Gains and Losses | p. 295 |
Conclusion | p. 295 |
Calendar Anomalies | p. 299 |
The January Effect | p. 300 |
Causes of the January Effect | p. 303 |
The January Effect in Value Stocks | p. 305 |
Monthly Returns | p. 306 |
The September Effect | p. 308 |
Intramonth Returns | p. 310 |
Day-of-the-Week Effects | p. 311 |
What's an Investor to Do? | p. 313 |
Behavioral Finance and the Psychology of Investing | p. 315 |
Technology Boom, 1999-2001 | p. 316 |
Behavioral Finance | p. 318 |
Building Wealth Through Stocks | |
Fund Performance, Indexing, and Beating the Market | p. 341 |
Performance of Equity Mutual Funds | p. 342 |
Finding Skilled Money Managers | p. 347 |
Reasons for Underperformance of Managed Money | p. 349 |
A Little Learning Is a Dangerous Thing | p. 349 |
Profiting from Informed Trading | p. 350 |
How Costs Affect Returns | p. 350 |
Development of Indexing and Passive Investing | p. 351 |
Potential Pitfalls of Indexing | p. 352 |
Effect of Overpricing on Returns | p. 353 |
Effects of Overpricing on Portfolio Allocation | p. 355 |
Conclusion | p. 357 |
Structuring a Portfolio for Long-Term Growth | p. 359 |
Principles of Long-Term Investing | p. 360 |
Return-Enhancing Strategies | p. 366 |
Implement the Plan and the Role of an Investment Advisor | p. 368 |
Conclusion | p. 370 |
Index | p. 371 |
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