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152 quarterly, 91-92, 120, 121-23, 124, 126, 132, 133,200,246, 389-90, 439n recovery of, 267, 268, 271-75 reports of, 104, 131,389-90 stock prices and, 88, 93, 94, 101, 108, 117-36, 385-94 surprises in, see surprises, earnings volatility of, 95-96, 102-4 Eastwood, Clint, 69-70 economic activity: forecasts of, 72, 76, 79, 97, 101, 104, 223-24 impact of, 142, 217-18, 292-94, 315, 368 statistics on, 223-24 economics, modern, 298, 377-79 Education of a Speculator, The (Niederhoffer), 217 Edwards, Benjamin R, 337 efficient market hypothesis (EMH), 34-37, 59-64, 373-98 as academic theory, 34-37, 59-64, 347, 372, 373, 376, 394, 396-97 anomalies of, 37, 383-85, 395 contrarian strategy vs., 140, 150, 151-53, 154, 178, 374, 376, 384, 385, 396 correlations and, 380-81 efficiency principle in, 34-35, 87, 376-77, 381-83, 386, 388, 395, 446n failure of, 374, 375-77, 394-97 as hypothesis, 34-37, 377, 394-97 influence of, 22-23, 30, 34-35, 63-64, 373-75 information analysis in, 381-82, 385-94 investor psychology and, 35, 36, 150, 248, 3478, 352, 364, 370, 372, 375-77, 379, 393-94 modern economics and, 377-79 modern portfolio theory (MPT) and, 62-64, 374, 375, 395, 399, 404 performance and, 35-36, 382-85, 374, 394, 446n probabilities and, 36-37 as progress, 373-74 rationality and, 375-79, 384 reliability of, 22-23, 30, 35-37 risk and, 1459, 151, 153, 297-303, 382, 383, 384, 395, 396 "semi-strong form" of, 59-61, 383-84, 385, 386 small capitalization stocks and, 317, 318, 322, 396 statistical analysis of, 34, 35, 61-62, 374, 379, 380-83. 384, 392, 394 "strong form" of, 61 volatility and, 380-81 "weak form" of, 61 Einstein, Albert, 71, 146, 377 Electric Boat Company, 319-20 EH Lilly & Co., 176-77, 186 Elliot, George, 69 energy industry, 265, 363 entrepreneurs, 114-15 equity funds, 57, 58 errors, investment, 214-37 anchoring in, 233-34 case rate vs. base rate in, 225-26, 229-30, 232-33, 236, 237 cognitive biases in, 19, 21, 216-37, 348, 372 decision-making and, 19, 38, 214-15, 216,218, 234-35,344 false analogies in, 216-21 hindsight bias in, 234, 269, 341, 343 inputs vs. outputs in, 230-40, 439n judgment and, 215-16 law of small numbers in, 221-24, 235 logical fallacies in, 214-15 market fashions and, 234-35 probabilities and, 215-16, 218-19, 222, 224-26, 232, 236 rationalism vs., 214 recent and salient events and, 231-33, regression to the mean in, 227-30, 235, 439n representativeness heuristic in, 216-21,222 mles for, 221, 224, 229-30, 231, 236-37 simplification in, 215-16 statistical, 215-16, 222-23, 227, 228 variables in, 218-19 Evans Products, 321 event triggers, 130-34, 135, 247, 261 experts, 67-73 see also analysts, financial Extraordinary Popular Delusions and the Madness of Crowds (Mackay). 354-55 Exxon, 91,349 Fama, Eugene, 46, 61, 62, 151, 132, 300-301, 317, 327, 376, 381, 383. 385, 386, 390 Farrell, Robert, 56 Federal Accounting Standards Board (FASB), 50
Federal Home Loan Mortgage Corporation (Freddy Mac), 268 Federal National Mortgage Association (Fannie Mae), 118, 268 Federal Reserve Bank, 73, 223, 287, 378 Festinger, Leon, 358, 361 Financial Analysts Journal, 91, 147n, 150 Financial Statement Analysis (Fridson), 171/J financial statements, 171, 244 financing, interim, 351-52 First Call, 90, 403 First Chicago, 267 First Chicago NBD, 277-78 First Fidelity Bank, 269, 276 Fischhoff, Baruch, 109 Fisher, Irving, 284, 292 Fisher, Lawrence, 386 Fleet Financial, 183, 184, 186 Florida Land Bubble, 353, 355 Forbes, 147, 150, 156, 174, 179-80,204, 217, 219, 262, 322n, 328, 329, 341, 342, 364, 396 Forbes Annual Mutual Funds Survey, 156, 342 Ford, Henry, 74 Ford Motor Company, 71, 74, 178-81, 186 forecasts, 67-87 charts in, 42-43. 45, 84, 217 comparative, 110-11, 113 consensus, 91-93, 94, 97, 100, 119-20 contrarian strategy vs., 139, 140-41 decision-making based on, 74, 79-80, 84, 113, 115-16 distribution of, 94-95 of eamings, 23, 52, 53-56, 76, 77-79, 87, 88,90-102, 108-9, 111-14, 115,298 earnings surprises and, 90, 94, 97, 112, 117, 118, 119-20, 125, 127, 128-29, 135, 136, 139, 140-41, 391-92, 432n of economic activity, 72, 76, 79, 97, 101, 104, 223-24 in expansions vs. recessions, 96, 97-99 historical, 68-73 "illusion of validity" in, 109 inaccuracy of, 16, 23, 40-41, 67-68, 74-75, 78-79, 81-82, 84-87, 91-102, 104, 108-9, 111, 114-19, 124, 135, 147, 375 industry, 194, 199 information processing for, 74, 75-84 inherent difficulty of, 73-74, 115-16, 159, 172 inside vs. outside view of, 109-11, 113 long-term, 91-93 overconfidence and, 81-83, 114-16 past record of, 99-100 probabilities and, 80-81, 82, 111-14 quarteriy, 91-92 revision of, 90, 98 rules for, 96, 102, 124, 136 timing and, 240-41 foreign markets, 205-10, 213, 239 Forsyth, Frederick, 69 Fortune, 61, 153, 300, 318, 319, 320, 322 Francis, Jennifer, 98 Franco-Prussian War, 238 Frank Russell, 153 fraud, 334-37, 342-43 French, Kenneth, 152-53, 300-301, 376 Fridson, Martin S., 171n Friedman, Milton, 375 Full Employment Act (1946), 289 fundamental analysis, 48-56, 57, 59, 61, 74, 150, 170-71,371,373,397 Gable, Clark, 69 Galbraith, John Kenneth, 241 Galen Health Care, 174-75, 186 Galileo Galilei, 396 Galton, Francis, 227 gambling stocks, 340, 369n Garzarelli, Elaine, 56, 221-22 Gates, Bill, 54 Genentech, 362 General Dynamics, 319 General Electric (GE), 181 General Motors (GM), 180, 349, 403 Gennany, 206-7, 210, 293, 315, 319-20 Germany Fund, 210 Gintel, Robert M., 335 Girsky, Stephen, 89 Glaxo, 194 glossary, 411-19 gold, 242, 247, 280-83, 288, 291, 294 Goldsmith, Barry R., 336 Goldsmith, Frederick N., 45 Gone With the Wind, 69 Graham, Benjamin, 49-56, 144-45, 156, 157, 163, 172, 183, 231,244,256, 295, 298, 305-6 Granger, Clive, 46 Granville, Joseph, 41, 45 Great Bull Market, 15, 49, 228 Great Crash-1929, The (Galbraith), 241
Great Depression, 49, 71-72, 216-19, 234, 239, 243, 262, 284, 288, 305 , 319, 324, 329, 354 Greenspan, Alan, 73, 223 gross domestic product (GDP), 31, 223, 289-90 gross national product (GNP), 72 growth analysis, 49, 53-55, 57-59, 101, 145 Growth at a Reasonable Price (GARP), 177, 178, 245, 246 Grubman, Jack, 89-90 Gulf War, 117, 181. 219-20, 262, 263, 264-65, 289 Halligan, Ted, 342, 343 Hambrecht & Quist, 364, 367 handicappers, 80-81, 82 Harvard Economic Society, 71-72 Hastings, Reed, 366-67 Hayes, Rutherford ., 71 health-care industry, 20, 174-75, 178, 231,365 health management organizations (HMOs), 174-75, 231,365 Herzog, Heine & Gedult, 337 Hewlett-Packard, 78, 245, 246 Hickman report, 243 "Higgledy Piggledy Growth" (Little), hindsight bias, 234, 269, 341, 343 Hoffman, Donna, 367 Holly, Buddy, 70 Hopkins, Sheila v., 287 horse racing, 80-81, 82 "how to" investment books, 186-87 Hulbert Financial Digest, 45, 222 Hulbert Service, 41 Humana, 174 Huxley, Thomas, 327 Ibbotson, Roger, 228, 317, 325-27 I/B/E/S, 90, 98 IBM, 54-55, 220, 279, 340, 368 indexes, stock, 63n, 3391 index funds, 63, 193,198-99, 204-5, 209 Industrial Revolution, 29 industries, 193-213 in bear markets, 200-201 "best" vs. "worst" stocks in, 193, 194, 196,200 in bull markets, 202 buy-and-hold strategy for, 196,197, 201-2 capital appreciation and, 195, 196 commissions and, 196 contrarian strategy for, 193-213 dividends for, 194-203 earnings by, 95-96, 100, 101, 199-200 export of, 289 financial information on, 202-3 forecasts for, 194, 199 in foreign markets, 205-10 investor psychology and, 193, 199, 200, 203,210,213 low P/E strategy for, 193, 194-203, 211-13 market performance for, 158,193, 198, 200-201,202,203 portfolios for, 170,196, 197, 199-202, price-to-book value ratio (P/BV) for, 194-203,211 price-to-cash flow ratio (P/CF) for, 194-203 price-to-dividend ratio (P/D) for, 194-203 rules for, 197,211 sell targets in, 210-13 transaction costs and, 196 inflation: bonds and, 273-74, 280-90, 291, 292, 294, 295, 304, 305-15 classic, 287-88 deficits and, 288-89 hyper-, 279, 292-94, 315 interest rates and, 56 rate of, 53, 72, 241, 287-89, 292-94 real estate and, 351 retums and, 280-90, 291, 292, 295 risk and, 297, 305-15 stocks and, 280-90, 291, 292-94, 295, 304, 305-15 information: complexity of, 79-84, 87, 91-92, 107-8, 111, 113, 116, 381-82, 385-94 configural processing of, 76-77, 107 decision-making and, 76-77 forecasts and, 74, 75-84 incremental, 79-80 long-term, 222, 226, 228-30, 232-33 revolution in, 29, 91 sequential processing of, 76, 77 simplification of, 215-16 unreliable, 225-26 initial public offerings (IPOs), 20, 93, 118,158, 209, 226, 239, 326-27, 332-33, 342, 362-72, 385 Institutional Investor, 53, 88-89, 105, 234-35
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