Market Panic (Paperback, 2nd)

Acknowledgements. List of Figures. Preface. Chapter 1: The Panic of 2008. What led to the 2008 crash? The bubble bursts. A real panic. Stage of the 2008 panic. The 2008 panic in perspective. Chapter 2: Preparing for panics and profiting from them. Bear markets yield the biggest gains. Bring on the crises. Buying panics. Why are investors bargain-averse? A simple strategy for success. Booms and bubbles. Identifying crashes and panics. Telling signs. Learning from history. Professionalism, Oscar Wilde and the conducting of orchestras. Chapter 3: Types of panics. Phoney panics. Self-induced or end-of-cycle panics. Contagious panics. Real panics. Panics follow the market's own bizarre logic. Chapter 4: The panic cycle. Panics get bigger, more unpredictable. Volatility. Looking for causes of boom-and-bust cycles. Stages of the cycle. Government attempts to cope with panics. This time, will it be different? New world - new crashes. Dubious practices and crooks move in. More a case of neglect than fraud. Chapter 5: A new age of panics. Stock markets bigger than national economies. Mr Ponzi is alive and well. New markets = new capital? New markets, new volatility. Where does all the money go? So, what role are stock markets actually performing? Contributing to instability - derivatives trading. Contributing to instability - hedge funds. Contributing to instability - portfolio insurance. Contributing to instability - momentum investment. Contributing to instability - program trading. Contributing to instability - new technology. Concentration of power. The rise of the investment banks. The stock option virus. Infectious greed. Chapter 6: The trader and the fund manager. The trader: Warren Primhak. The fund manager: John Carey. Chapter 7: The psychology of panics. Rational explanations for the seemingly irrational. It's people, not markets, who panic. Herd behaviour. Hostility to contrary opinions. Optimism overcomes fear. Fear overcomes greed. Risk aversion. Coping with new information. Momentum. Illusions of control. How the past becomes a distant country. Behaviour in emerging markets is different. Perception is all - defying the herd. Chapter 8. Does diversification provide protection against stock market fluctuations? Decision regret. When to switch. Returns for diversified portfolios. Diversification into property. Diversification into gold. Diversification into bonds. The case for equities and only equities. Diversifying within the equity market. The great defensive stock myth. Switching between markets. Diversification through derivatives. Doing nothing is best. Chapter 9: Is the market always right? Back to basics. The origins of equity investment. The problem with efficient markets theory. What is rational stock market behaviour? The god of shareholder value. The earnings game. The M&A game. Paying shareholders, robbing companies. How the markets batter economies. Entrepreneurs shunning stock markets. The hired hands versus the controlling shareholders. Despite everything - the case for stock markets. Understanding the contradictions. Like revolutions, markets kill their babies. Stock markets nurture the strong. Shutting our market noise. Chapter 10: Opportunity. Bear markets produce the greatest opportunities. Speculating on recovery. Understand the bias - understand the market. Timing. Setting targets. The brave investor. Predicting extreme behaviour. New markets - old patterns. The stakes are higher. A conflict of interest. Notes. Select Bibliography. Index.