Book Description

Eurodollar trading volume is exploding, with no end in sight tools phenomenal growth. The Eurodollar Futures and Options Handbook provides traders and investors with the complete range of current research on Eurodollar futures and options, now the most widely traded money market contracts in the world. The only current book on this widely-followed topic, it features chapters written by Eurodollar experts from JP Morgan, Mellon Capital, Merrill Lynch, and other global trading giants, and will quickly become a required reference for all Eurodollar F&O traders and investors.

Reviews (2)

The Standard!
Clearly the best book on Eurodollar futures and options. The book is a must for anyone involved in fixed income securities.

Highly recommended
Having just finished reading the author's treatment of bond futures in the 'Treasury Bond Basis,' I was happy to see that Burghardt was updating some of his material from the early 1990s on Eurodollar futures. The 'Bond Basis' was an excellent and thorough analysis, and 'The Eurodollar Futures and Options Handbook' follows the same trend.

He provides an excellent overview of the institutional details of Eurodollars and their uses. The book is at its strongest when dealing with issues of the convexity bias and also scores high by not neglecting important issues like the stub period. Perhaps my favorite chapter was on callable bonds and the extension/compression risk, which, while a little misplaced in a book on Eurodollars, still provided a very lucid explanation of the relevant issues.

With regard to options, the author touches upon some of the interest strategic combinations using serial and mid-curve options, but I feel that he could've delved a bit deeper in this part of the book. It's the only area in which I felt the book was somewhat lacking.

Having said all that, if you're looking to learn about Eurodollar futures, I can't imagine there's a better book out there. This is an excellent compilation of a number of Burghardt's research from the 1990s together with more recent updates. Even if Eurodollars are not your main area of expertise, this book will still help you to gain a more solid understanding of many of the pertinent topics in fixed income. ... Read more

Book Description

Interest rate swaps--used globally by both corporate finance departments and investment firms to control interest payments, manage debt, and enhance investment portfolios--constitute a growing 1.9 trillion market. Now, financial personnel, swap traders, corporate treasurers, and professional cash managers can turn to this clear, authoritative guide to master all the methodologies used in the international swap market. Written for anyone whose work is touched by swap market activity, the guide uses diagramming techniques to first explain what swaps are, and how and why they are traded. It then addresses more sophisticated financial transactions, such as rate setting, analysis of swap desks, market-to-market, speculating, and financial statements. Readers will find detailed coverage of more than two dozen derivative products, including spreadlocks, swaptions, caps, and flows, and learn how swap trading works in foreign currencies and interest rates. Critical light is also shed on questions regulators are currently raising about the security and future of the swaps markets. ... Read more

Reviews (2)

Me thinks some reviewers protest too much
This book has been damned for being too simplistic, therefore consign it to the trash cart, or so we are expected to do. But given the relative novelty of these financial products simplicity in the best sense of word could be seen as a virtue in any work dealing with this topic. So, why the evident annoyance from some. Could it be that this work dissolves some of the mystery involved, and threatens some closed shop in these markets ?

Outdated and Shallow
The book easily shows its age in its focus on standards and issues which have long ago fallen by the wayside in this dynamic market. Far worse is that the book is preciously short on quantitative and analytic methods, and long on third-grade-teacher types of admonishments. I read the whole book becasue I paid for it, there are better, more up-to-date volumes out there. Could possibly be re-named "Swaps for English Majors", although, English majors as a group might correctly be upset at this association. ... Read more

Book Description

An introduction to the complex world of options that every investor can use

Too many books on options trading make the mistake of assuming that readers can already tell a delta from a sigma summation. Options and Options Trading breaks the code that envelops the often-foreign language of options, providing an accessible introduction into how the options market works as it explains the rules that traders must understand if they hope to take part in this high-leverage, high-profit game. Author Robert Ward's goal is simple--to demystify the tangled world of options trading without leaving readers too confused and frustrated to continue. The book to read before continuing on to the more detailed, and much higher-level, existing library of options trading guides, Options and Options Trading features:

• End-of-chapter material including "Things to Think About" and "Key Concepts"
• Simplified explanations of complex mathematical equations
• Step-by-step rationales to help readers move from basic to complex

Book Description

"The world of investing floats on a vast sea of words, most of which are obvious, simple-minded, and clichés, and all of those are dangerous to financial health. The story in this book bears no relation to all that stuff. Ineichen’s message is original, powerful, comprehensive, and essential to robust financial health. The literary clarity he blends with his financial wisdom is an additional blessing."
–Peter L. Bernstein, President, Peter L. Bernstein, Inc.,
author of Against the Gods and The Power of Gold

"No one can afford to risk money in hedge funds without reading this comprehensive guide. The details are illuminating, presentation captivating, analysis brilliant and lessons profound. A wonderful contribution to the hedge fund literature."
–Prof. Narayan Y. Naik, Director, Centre for Hedge Fund Research and Education, London Business School

"A good understanding of the working of the hedge fund market and hedge fund strategies is important for every active investor. Ineichen’s book does an excellent job tying together historical, empirical, and theoretical analysis in a way readily accessible to practitioners. A more comprehensive examination of the hedge fund market and hedge fund strategies would be hard to find."
–Hans de Ruiter, ABP Investments, Senior Portfolio Manager
Quantitative Equity Strategies

"Hedge funds are not mainstream and this book is not mainstream either. The author challenges traditional investment paradigms and the way investors think about risk. An exciting read and a must for every professional investor."
–Dr. Burkhard Poschadel, Chief Executive Officer, GAM

"Written for the professional investor, Alexander Ineichen’s book provides a comprehensive, in-depth analysis of alternative investment strategies. Combining the latest research with his own insights, Ineichen has produced the definitive study of hedge funds and funds of hedge funds."
–Richard Elden, Chairman, Grosvenor Capital Management, L.P.

"Alexander Ineichen’s in-depth research findings and analytical insight are brought together in this book which is chock-full of useful statistics on hedge fund strategies. Definitions, examples, return/risk parameters, and key risk factors are provided for each strategy. This comprehensive book is a necessity for every hedge fund investor."
–Lois Peltz, President, Infovest21 ... Read more

Reviews (8)

Highly Recommended!
Hedge funds burst into the headlines in the early 1990s, when George Soros became a household name - at least in Europe, where many people blamed him and his hedge fund for wrecking the European exchange rate mechanism. Similarly, a U.S. hedge fund called Long Term Capital Management (LTCM) began with an aura of investing invincibility, only to fail dramatically. Hedge fund investing is sometimes, but not always, high risk and high return. Once limited to a privileged elite group of investors, hedge funds are now opening their rosters to less sophisticated, less wealthy speculators. But hedge funds are not just like any other funds, and anyone contemplating an investment needs a solid, comprehensive guide, such as this book. Author Alexander M. Ineichen, neither a salesman nor an alarmist, pulls no punches when discussing the risks of hedge funds. He is quite straightforward about the sometimes astonishing success of some hedge fund managers, but careful to point out the common misconceptions about them. Without hedging our bets, we find this book a valuable addition to every investor's library.

Dances Around the Topic
This book rambles on about the hedge fund industry. It gives a lot of definitions and statistics, but ultimately falls down. When you buy a hedge fund, you never really know what you are getting.

A Lesson from the Titanic
The iceberg on the cover represents total risk-partly visible and partly not. Ineichen's point is that hedge fund or absolute return managers tackle total risk while their traditional mutual fund counterparts worry about only one part of it, namely the risk of straying from their benchmark. His extensive discussion contains worthy lessons for all investors who want to understand risk. While not every chapter may be useful for every reader, this book is an excellent place to learn about alternative investment strategies.

Who is the Audience?
This book has many fine features but has two serious drawbacks as well.

On the positive side, I have never read a more complete polemic in favor of the hedge fund industry. He shreds EMF with loads of good evidence and humorous anecdotes. However, there seems to be a constant drive to reinforce this point. Unfortunately, it takes away from a more thorough analysis of the types of hedge fund investing.

Another problem with the book is that it has trouble discovering its audience. At times, we get detailed descriptions of what alpha and beta represent (Finance 101) and at other times, abstruse PM concepts are brushed over as common knowledge.

I would definitely recommend this book but I recommend that the reader is accompanied by a Dictionary of Finance and Investing.

Essential Hedge Fund Guide
This is an excellent introduction for potential investors to assess risk and reward.

For more on new hedge fund products, hedge fund leverage, and off-balance sheet risk, I also highly recommend Tavakoli's "Credit Derivatives" 2nd Edition. ... Read more

Book Description

Hedge Funds are one of the fastest growing sectors of asset management. The industry has changed from being a small number of firms that features big name players such as George Soros and Julian Robertson, to a large market involving many thousands of companies.

Press reports of the spectacular success and failure of firms such as the Quantum Fund, the Tiger Fund and LTCM have led to many misconceptions concerning hedge funds, their power and their influence. This state of affairs is not helped by the fact that they are exempt from regulation and little is known about them.

This book dispels several misconceptions about hedge funds' operations and provides an impartial, up to date and comprehensive blend of theoretical and practical analysis of the market. The book also shows readers the fundamental concepts needed to understand strategies used by the funds and their potential positive and negative contributions to investment portfolios. ... Read more

Reviews (5)

Good comprehensive guide to how hedge funds work
More quantitative than most other books on hedge funds, this volume provides a comprehensive look at the hottest investment vehicles at the moment. Starting with the history, the book discusses the structure, operations, strategies, and performance measures of hedge funds. Unlike books written by the president of HFR, which are purely marketing turd, this book has substance and can be kept as a solid reference. Minor problems include a few critical typos, some irrevelent charts, and choppy English in a few places -- and a high price. But these do not distract from the value this book, and I recommend it to all interested in the topic.

Broad introduction
This is a good introduction into the subject. Well researched. If you only buy two books on the topic, this should be one of them.

In-Depth and Comprehensive
Lhabitant's "Hedge Funds: Myths and Limits" covers its subject from legal and tax aspects to quantitative and statistical finance. More than this, in line with the subtitle, the book debunks the myths and outlines the limits for the hedge fund industry. The critique delivered is however balanced, and the book manages to maintain a constructive as well as instructive tone. Different material is separated in a way that make the book a good read for both people outside the finance industry and quantitative analysts. Look for more on this at [webpage]

THE HEDGE FUND BIBLE
This book is a compendium of information on hedge funds starting with an instructional and basic introduction for both quantitative and qualitative investors. The first part explains in detail the basics, the legal environment, operational, and organizational structures of hedge funds. It also examines custodial and administration policies in various jurisdictions in European countries where some investment advisors of hedge funds are located. The chosen European setting is largely due to the explosion of hedge funds and hedge fund interest, which is the main engine of change in the equity finance landscape currently undergoing a revolution. The author dismisses several misinterpretations of the way hedge funds operate and contributes an impartial and comprehensive blend of both theoretical and practical underpinnings of global markets.
The second part goes into detail regarding the fundamental concepts needed to understand hedge fund strategies along with their potential positive and negative contributions to investment portfolios. It also thoroughly examines the statistical biases in hedge fund databases and indices. At the same time each chapter is supplemented with real world examples involving corporations and the use of hedge fund strategies. An overview of the major index providers is an added feature to inform investors how each database vendor has classified the hedge fund strategies and their different methods are examined. The various hedge fund strategies are presented in three chapters and an entire chapter is devoted to directional strategies such as global macro, sector, short sellers and managed futures.
In the third and final part, the author highlights the important aspects of including hedge funds in traditional portfolios, database differences, non-transparency, due diligence, selecting and monitoring hedge funds. The author clearly outlines the benefits for investors using asset allocation and how it can be applied towards hedge funds. The second to last chapter of the text educates the reader on how he can properly navigate, identify and select hedge fund managers through the maze of almost 6,000 hedge funds. Of note, the chapter on funds of hedge funds describes the benefits of investing in these products, what the author calls "meta diversification" and discusses portfolio optimization along with what the future holds.
Capital guaranteed products are addressed in one of the final chapters and the advantages of these new structured products often referred to as capital protected notes are explained. These products permit investors to get back a specified portion of capital they fully invested, enabling them to maximize their positions in hedge funds. Due to the recent creation of capital guaranteed products is sure to make the hedge fund industry grow even at a faster pace and it seems that institutional investors have bought this new idea. These new products will allow for equity style returns with less volatility and the security of cash.
The final chapter deals with multifactor models, Sharpe style analysis and Value at risk.
The author concludes with a chapter on advanced quantitative topics and follows this with an appendix on returns and risk statistics of hedge funds. This book brings the reader completely up to date with the latest developments in the hedge fund industry. The elaborate bibliography and over 60 websites found at the end of the book is the icing on the cake.
This gem of a book can serve as a handbook and a practical guide to the hedge fund industry. LHabitant has done a superb job and has provided all investors, portfolio managers, as well as professional financial advisers with a complete one stop hedge fund shopping text. It is the ultimate book about the hedge fund industry.

Excellent !!!
Monsieur Lhabitant highly succeeded in writing a book in a very readable style with a strong academic framework for (especially institutional) investors and professionals.

HEDGE FUND OVERVIEW
history, legal environment and structures, operational and organisational structures

HEDGE FUND STRATEGIES
tools used by hedge funds, long/short strategies, arbitrage and relative value strategies, event driven strategies, directional strategies, hedge fund indices, hedge fund performance.

HEDGE FUND INVESTING
asset allocation, hedge fund selection, fund of funds and metadiversification, capital-guaranteed products, advanced topics: inside the black box.

appendix: the statistics of hedge funds

Bravo !!! ... Read more

Reviews (3)

A bona fide Wall Street classic!
Nicolas Darvas was both an excellent trader and writer. This book presents a clear exposition of his successful, break-out trading method. It shows how he was able to ride the winners by using his nested "box" system. Further, it shows how he used "techno-fundamental" screening to select only those issues which had the best chance for sustained rally after the break-out event. Event-trading is useful because it is real-time, gives definite signals, and affords minimal lag in response time. This book should prove to be of great utility to someone who wants to learn to trade or to improve his or her trading skills.

Disarming Title
Being the author of the book "Futures For Small Speculators", I am not a big fan for equating investing with gambling, but Mr. Darvas has successfully done it again. Somehow he is able to make the negative connotation of gambling and turn it into a lesson for the novice and experienced trading.

This is essential, because if you don't know what you are doing wrong, how can you learn to do it right?

So by making traders realize that their is a risk of loss it puts them on the alert.

The nature of stock investing & the details of his method.
I read it in one sitting. This title fleshes out the contents of his first. I found its chief value to be in the identification of stock investing with gambling, and also the detailed mechanics used to define and time his entries and exits. Anyone at least mildly excited by his first offering ought to enjoy a little more of Darvas's company. ... Read more

Book Description

The trading strategies of legends Jesse Livermore, Bernard Baruch, Gerald Loeb, and more provide ways to triumph in the market

Today's bookshelves are so laden with Johnny-come-lately experts, eager to sell their knowledge to any and all, that it's sometimes hard for traders to know which way to turn or whom to trust. Lessons from the Greatest Stock Traders of All Time makes the choice simple, examining the careers of five traders--Jesse Livermore, Bernard Baruch, Gerald Loeb, Nicolas Darvas, and Bill O'Neil--who, more than any others over the past century, demonstrated tremendous success at conquering Wall Street.

This technique-filled book presents numerous ways in which the timeless strategies of these investing icons can be used to tame today's high-speed, unforgiving marketplaces. Comparing and contrasting the successes--and occasional failures--of these five giants of finance, it reveals:

• What Jesse Livermore did to correctly call every market break between 1917 and 1940
• How Bill O'Neil stuck to basics to create his famously effective CANSLIM system
• The strategies Nicolas Darvas used to become a self-made millionaire several times over

Reviews (2)

GREAT!!!!
I love Bill O'neil and his philosophy. I am very successful over a period of time using his system. Those other guys in this book who have come before him are amazing also. This books is one of the few that you should read more than once.

Great Book!
Thanks for bringing back to life the great traders of Loeb and Darvas. Great link to the similarities of the best traders over 100 years. Excellent profiles of the legends and how their strategies are the ones to use to profit in stocks. ... Read more

Book Description

A practical, hands-on guide to setting up, adjusting, and trading mechanical systems that requires no computer or programming skills! Here’s everything you’ll need to develop and verify each stage of a profitable trading strategy, from formulation through testing to real-time trading. Armed with the author’s battery of easily accomplished testing and optimization techniques — many never before published — you’ll design a workable trading strategy, reliably measure its profit potential and risk, and then test it to see if it works in real-time trading. No matter what your level of trading expertise, now you can swiftly isolate and eliminate the causes of trading failure and make the decisions essential to profitable computerized trading. You’ll discover:

• The seven major components of mechanical trading strategies and their uses
• When and how to use fast, accurate, and realistic computer simulations to evaluate a strategy’s trading performance without risking precious capital
• The best ways to tailor a trading strategy to fit the unique personalities of widely different markets
• What to expect from a trading model in real-time trading
• How to judge trading performance with respect to historical testing performance

Reviews (4)

Authors' Comments
I am pleased to note that many still find my book published in 1991 to be useful and informative.

However, I might suggest to any who come to these pages to be wary of the claims made by the vendors in the sponsered links on this page, especially the last two.

I suspect that it would be prudent for a trader who is considering one of these trading systems to apply the principles of trading system evaluation provided in my book to theses claims before becoming involved with these trading systems.

Bob Pardo

Excellent how-to on applying simple statistical analysis
A great instructional book on the application of statistical analysis to trading systems. It's excellent for novice trading system developers who don't yet understand the importance of rigorous testing or discretionary traders who aren't yet aware of their need for a carefully and thoroughly tested trading system--a real eye-opener. While the text is somewhat repetitive and the references to software are extremely dated, the techniques within are timeless and are boiled down so that non-mathematicians can easy understand and apply them. This book helps you bypass the slow process of learning system development by trial-and-error and gives you a clear step-by-step breakdown of how to ensure that your trading system is sound and "robust." However, for those of you looking for trading system recipes/indicators/source code, you won't find it here. Coming up with ideas for a trading system and setting them up is entirely up to you--this book only describes the process of forging an existing trading system into a robust system that can be used successfully in real-time trading. A must-read for any serious trading system developer!

Best Introductory Technical Analysis Book
This book contains everything you need to know to understand the theory of computerized trading systems. It goes through the process of choosing a strategy, implementing it in algorithm form, perfecting variables, and optimization. The most important parts, in my opinion, are those regarding tests of statistical significance of the test results. The author is also careful to caution against any "over-optimization," which is the bane of any trading system.

Incedentally, I manage the technical analysis arm of a newsletter that attempts to forecast the best performing Fidelity Select mutual fund. This book was an asset during the implementation of my trading system. I would choose it before "The Mathematics of Technical Analysis," by Clifford Sherry, for example.

The trading system paradigm detailed in this book is based on technical analysis; the use of mathematical tools to estimate the future performance of a security. Technical analysis is, of course, at odds with the strict versions of the efficient market theory. Do you believe that stock performance is deterministic, that future price changes can be inferred from past ones? If so, this is the book to use to implement your computerized trading system.

Well done !
An excellent guide through trading systems. It helps me a lot in My day trading.Only useful things. ... Read more

Book Description

Numerical methods for the solution of financial instrument pricing equations are fast becoming essential for practitioners of modern quantitative finance. Among the most promising of these new computational finance techniques is the finite difference method-yet, to date, no single resource has presented a quality, comprehensive overview of this revolutionary quantitative approach to risk management.

Pricing Financial Instruments, researched and written by Domingo Tavella and Curt Randall, two of the chief proponents of the finite difference method, presents a logical framework for applying the method of finite difference to the pricing of financial derivatives. Detailing the algorithmic and numerical procedures that are the foundation of both modern mathematical finance and the creation of financial products-while purposely keeping mathematical complexity to a minimum-this long-awaited book demonstrates how the techniques described can be used to accurately price simple and complex derivative structures.

From a summary of stochastic pricing processes and arbitrage pricing arguments, through the analysis of numerical schemes and the implications of discretization-and ending with case studies that are simple yet detailed enough to demonstrate the capabilities of the methodology- Pricing Financial Instruments explores areas that include:
* Pricing equations and the relationship be-tween European and American derivatives
* Detailed analyses of different stability analysis approaches
* Continuous and discrete sampling models for path dependent options
* One-dimensional and multi-dimensional coordinate transformations
* Numerical examples of barrier options, Asian options, forward swaps, and more

With an emphasis on how numerical solutions work and how the approximations involved affect the accuracy of the solutions, Pricing Financial Instruments takes us through doors opened wide by Black, Scholes, and Merton-and the arbitrage pricing principles they introduced in the early 1970s-to provide a step-by-step outline for sensibly interpreting the output of standard numerical schemes. It covers the understanding and application of today's finite difference method, and takes the reader to the next level of pricing financial instruments and managing financial risk.

Praise for Pricing Financial Instruments

"Pricing Financial Instruments is the first broad and accessible treatment of finite difference methods for pricing derivative securities. The authors have taken great care to clearly explain both the origins of the pricing problems in a financial setting, as well as many practical aspects of their numerical methods. The book covers a wide variety of applications, such as American options and credit derivatives. Both financial analysts and academic asset-pricing specialists will want to own a copy."-Darrell Duffie, Professor of Finance Stanford University

"In my experience, finite difference methods have proven to be a simple yet powerful tool for numerically solving the evolutionary PDEs that arise in modern mathematical finance. This book should finally dispel the widely held notion that these methods are somehow difficult or abstract. I highly recommend it to anyone interested in the implementation of these methods in the financial arena."-Peter Carr, Principal Bank of America Securities

"A very comprehensive treatment of the application of finite difference techniques to derivatives finance. Practitioners will find the many extensive examples very valuable and students will appreciate the rigorous attention paid to the many subtleties of finite difference techniques."-Francis Longstaff, Professor The Anderson School at UCLA

"The finite difference approach is central to the numerical pricing of financial securities. This book gives a clear and succinct introduction to this important subject. Highly recommended."-Mark Broadie, Associate Professor School of Business, Columbia University

For updates on new and bestselling Wiley Finance books: wiley.com/wbns ... Read more

Reviews (4)

A specialised book for special Instruments
This book approximates the solution of one-factor and multi-factor PDEs that describe derivatives such as barrier options, convertible bonds, Asian options and credit derivatives.
Standard finite difference schemes are used. In particular, 3-point centred difference schemes approximate the derivatives in the S directions while Crank-Nicolson (averaging) is used to approximate the t derivative. Stability and convergence of the schemes are proved using the Lax Equivalence theoerem. Special attention is paid to resolving the, by now well known problems associated with the Crank Nicolson method. The workarounds are choosing smaller meshes near discontinuous boundaries, coordinate transformations and choosing the right sampling points.
The book is a good attempt (in my opinion) to show how to apply FDM in financial engineering applications. It is probably most useful for those who have already experience of FDM. It is NOT an introductory book.
Some of the criticisms are (this is why I give it a 3 star):

1. The von Neumann stability analyis technique is only applicable to constant coefficient, linear PDE. It is outdated, better methods being the maximum principle and viscosity solutions.

2. The discrete set of equations need to be solved by rather esoteric matrix solvers bacause the authors discretise a PDE in all directions. Using ADI or operator splitting instead lets us solve one-dimensional problem with Tridiagonal LU Decomposition.

3. A lot of detail on meshes has unfortunately been left out.

4. Using Crank Nicolson only aggrevates the problems in FDM schemes. There ARE better methods out there.

5. TYPOS!! for example, equation (4.13) on page 122. The S term is missing.

On the other hand, this book is aimed at real-life problems. However, extra detail needs to be added in my opinion in order to make it more accessible to a wider audience.

Excellent Content - Sloppy Editing
Reading this book produced three instances where previously encountered material was explained from a new and different point of view, the clouds parted, and I was bathed in the bright sunshine of understanding. Creation and valuation of hedging portfolios, reduced to their fundamentals, is now far less taxing to the memory. Explanations for the discretization of time and space now render previously mysterious numerical algorithms obvious in their intent. American options discused in a free boundry framework are far more intuitive than in the optimal stoping time approach. As much as I enjoyed the content, the occurence of numerous editing oversights was a considerable annoyance. This was even more surprising when I read the other customer review which indicated that one of the authors was an editor. Editors should be held to a higher standard and so I deducted an extra star!

A clear treatment, with well-chosen subjects
Tavella and Randall have produced a compact, yet complete treatment of finite difference techniques in finance. I met Curt Randall in 1996 when his SciFinance software was in its infancy (though there is currently no connection between us). This software automatically generates C code to solve PDE's. That is an order of magnitude -- maybe two orders -- harder than just writing the code by hand. I inferred that Dr. Randall has a unique understanding of finite-difference methods for solving PDE's. For these reasons, I was very interested to see his book. For a more general treatment finite difference schemes, see Gordon Smith's 1986 book.

The mathematical motivations for all the techniques presented are given, with no wasted exposition. I liked the lucid analyses of stability, which many books in finance gloss over. I also liked the mention and partial analysis of a large set of solvers of sparse linear systems. having not followed the literature on jump processes in recent years, I was quite happy to see their treatment as well.

This book is all of what it claims to be, and no more. I do not recommend it as a textbook, or as a reference for those not already somewhat familiar with the subject, either from the mathematics side or the finance side. You will not get an explanation of what an eigenvalue or fourier transform is. The Lax Equivalence Theorem is cited, but not motivated or proven. No mention is given of when it might make more sense to use, say, a Monte Carlo scheme to find an option price. You won't find much economics in the book. But you will find a clear, correct, and useful analysis of more or less all aspects of finite difference schemes as they relate to solving contingent claims pricing problems.

A focussed book on an important subject
The pricing theory due to Black Scholes and Merton is widely recognized as one of the most significant contributions of economics to practice. There are now many good introductory books surveying the vast literature on the subject. So what is needed is a book showing how to implement various models in practice. The book by Tavella and Randall is the first in what I hope is a series of such books. The authors are well known in computational circles: Tavella is the editor of the highly regarded Journal of Computational Finance and Randall is a Principal at SciComp, a leading developer of software synthesis technology for the finance industry. The authors focus on finite differences, which is an important generalization of the common tree approach, and thus is one of the most widely used numerical techniques in finance.

The book's first two chapters introduce the mathematics of financial derivatives in an intuitively appealing manner. For example, measure changes are introduced as a powerful tool without strong demands on the reader in terms of background. Also, linear complementarity is used in the context of valuing American options, again in an intuitive fashion. The third chapter introduces finite differences in the context of the familiar parabolic PDE governing derivative security values. It is in this and the remaining chapters that much useful material can be found. For example, the cell averaging technique in chapter 4 is a very useful device for dampening the error introduced by slope discontinuities which commonly occur in financial problems. The authors also give the first textbook treatment of the important class of pure jump models such as the variance gamma model, which are growing in popularity. The chapter on coordinate transformations gives the finite difference version of what some finance people term the adaptive mesh method.

In summary, this book is a must-read for anyone seriously interested in implementing derivative security pricing models. I hope the authors plan to follow up with a more advanced version which can cover such interesting topics as multi-grid, hopskotch, operator splitting, and the like. ... Read more

Book Description

The Encyclopedia of Trading Strategies is for traders who want to take the next step to consistently profitable trading. The authors--themselves seasoned veterans of the futures trading arena--pinpoint the trading methods and strategies that have been shown to produce market-beating returns. Their rigorous and systematic backtesting of each method, using the same sets of markets and analytic techniques, provides a scientific, system-based approach to system development...to help you assemble the trading system that will put you on the road to becoming a more consistently profitable trader. ... Read more

Reviews (17)

A Complete Insight Into Encyclopedia of Trading Strategies
The Encyclopedia Of Trading Strategies provides a solid foundation for developing the skills and knowledge base to develop one's own set of quantifiable trading rules and for developing a reliable trading "system."

The book begins laying the foundation with a description of the tools necessary to construct a system. Data -- the cleaner, naturally, the better -- is the point of departure. A discussion of simulators -- software that allows you to simulate trading -- ensues and walks you through the mechanics of interpreting output and determining their reliability and power.

A discussion of optimizers, or tools that find the best possible solutions to a problem follows, critically describing the major types of optimization and products available and how to achieve success, or failure, in their implementation.

Statistics for systems analysis are the next tool detailed. Without statistics, there is no way of knowing whether the profits (or losses) resulting from a tested system are real, an artifact of sampling or chance.

With the tools required for systems testing in place, the book launches into the discussion of its primary focus, the study of entries and exits. Ultimately, and deceptively simply, a trading system is nothing more than a system of entries and exits (at a profit or at a loss).

The Encyclopedia of Trading Strategies is something of a misnomer in that the title leaves the impression that one will find a catalogue of trading strategies and methods that the reader can scrutinize to extract specific techniques and use as a reference guide. In fact, the book provides the framework and background-knowledge necessary to design, test and analyze one's own trading system and could have as easily been dubbed A Primer On Developing Trading Systems.

One of the very best out there
This book is one of the best trading books ever published. It provides a very systematic and scientific approach of evaluating entry and exit techniques across a diversified futures portfolio. It presents by far the most rigorous and sound methodology of evaluating trading system robustness. The section on the use of statistical analysis to evaluate model validity is easily worth the price of the book.

The authors did an excellent job defining the correct way of optimizing system parameters. The part on exit techniques is also impressive. It contains a methodology on the development of exit strategies and presents many exit techniques.

Overall, the book is packed with a wealth of information. Every time I re-read a chapter I find a new gem. I strongly recommend this book to all mechanical system traders, especially those trading diversified commodity portfolios.

Great system trading book
Great book if you are interested in writing system code. Good backgound about ideas that may work and those that do not. The most valuable part of the book is the companion CD that is availabe. The software on the CD allows for testing of portfolio systems (something not really possible with most retail charting/trading software). Source code is fully revealed allowing for as much customization as one would like.

Interesting trading models and exit strategies
Mostly testing of trading models in C or C++. then testing of exit strategies. Well organized and easy to read, interesting even if you are not interested in optimizing.
Too much talk about slippage which he should point out that this is a problem for day traders that could be solved by automated trading platform and its not for everybody to worry about that much. Then talks also about gunning, as the name implies.

I am quite impressed ..
This is a great book if one wants to build a trading system starting from writing the code with a language such as C++. Especially given the fact that one can order the software from the author.

The book also examines some of the most common trading strategies. However, having reviewed other books on this topic and given the title describes the book as an 'Encyclopedia of Trading Strategies", it would be a useful book but not all-encompassing as one may hope.

Overall a useful book, particularly for programmers. As a book on trading strategies it does give some valuable insights but other books on the topic have to be reviewed as well.. ... Read more

Book Description

To be successful in the hedge fund business, financial professionals must understand every aspect of this dynamic investment vehicle. With Hedge Fund Course as your guide, you'll become familiar with the different aspects of hedge funds and discover how to achieve success in this field.

Hedge Fund Course presents all the technical and quantitative knowledge necessary to understand hedge funds, and complements the less-technical information presented in the popular How to Create and Manage a Hedge Fund—also written by Stuart McCrary. This self-study guide is designed to let you quickly learn as much as you require. Short chapters describe the essential facts on a particular hedge fund topic, and the question-and-answer section that accompanies each chapter allows you to delve deeper into the topics reviewed in the text. After a brief introduction, Hedge Fund Course gets down to business, with discussions of:

• Different types of hedge funds and hedge fund investors
• Hedge fund investment techniques
• Hedge fund business models
• Measuring the performance of hedge funds
• Legislation and regulation of hedge funds
• Accounting and taxation aspects of hedge funds
• Risk management and hedge funds

Whether you're in the hedge fund business, have hedge fund clients, or invest in hedge funds, Hedge Fund Course can help you refine and develop your knowledge of this field. ... Read more

Book Description

Trading Spreads and Seasonals is a powerful, profit enhancing trading course based on Joe Ross' years of personal trading experience and remarkable trading success.

These days, it seems most traders are focused on outright futures or options trading strategies. You hardly ever hear of anyone who trades spreads or seasonal spreads, or outright seasonal futures - especially at the same time! That's because very few futures traders truly understand seasonality. This is why far too many never earn all they can from trading. Worse than that, they end up losing money.

Fortunately, Trading Spreads and Seasonals changes all that. It stacks the odds of winning in your favor. How? By giving you a complete explanantion of how to crack the markets using a novel approach that combines explosive profit potential of futures with seasonally measured risk. Plus you learn to protect yourself from the vagaries of market price action that serve to turn winning trades into losers.

You'll find out just what to look for before you enter a trade, such as how to spot trends that will affect you positively where it counts, your trading account. You will not only learn how to hedge your risk, but how to use it to explode your profits in a steady pattern of equity growth! You'll see which markets to avoid and which trades to avoid. You'll know when to get in and, MORE IMPORTANTLY, when to get out. Trading Spreads and Seasonals does it simply, without all the technical mumo-jumbo and mathmatical formulas of other approches. ... Read more

Reviews (6)

NOTHING NEW
Unfortunately nothing new at all: Bollinger Bands, RSI and typical chart patterns. Unprofessional lay out, a lot of unused space and many peripatetic explanations. Maybe some ideas for absolute beginners. I will short this book and rather spend the money on a new Harry Potter novel.

Where's the Meat?
I think Joe did an excellent job of describing what seasonal/seasonal spreads are, but gave me little in the way of new ideas for trading them, or new research into spreads that really work. Most traders would be much better off with a subscription to Moore Research if they already know they would like to trade futures in this manner.

I am a believer...again!
I have traded futures for almost 11 years, for my own account and as a broker. I have also written three books regarding futures investing. That being said I really do know how to separate the wheat from the chafe.

This book is all wheat. Ross, once again, breaks the silence on spreads and seasonal trading. Farmer, Hedgers, and life long futures traders, happily use spreads instead of options to limit their risk, market exposure, and margin requirements.

On the otherhand I have been looking at seasonal trades for years and their is only one realistic approach to them, don't believe they will work and plan accordingly. That means strong money management skills on your part. Great book. It made me believe in the seasonals once again and combined with my own money management strategies I am ready to give Ross the benefit of the doubt.

Closely Guarded Secret
"Secrets!"
If you have gotten this far by choice or accident, you have stumbled onto the most profitable way to make a living with the least amount of margin in the field of speculation.

Ross' refers to seasonal spreads as a "closely guarded secret." Many books about trading assume that you are starting out with many thousands of dollars earned somewhere else.

This little known facet of the commodities market is ideal for people who have a steady income and want to earn a second income trading a small amount of capital.

The key here is supplemental income. You have to find a way to keep your day-to-day needs for income separate from your program of wealth building. You have to find a way to keep your spending from increasing just because you are making a bundle trading. Seasonal Spreads are how many new traders build up a large trading account in a short time, starting with a hardly any capital in the commodities market.

In high school you should have become familiar with the "Ten Multiples." Let me refresh your memory. Mony grows geometrically. How much do you have when you double one thousand dollars ten times?

1. 2,000.00
2. 4,000.00
3. 8,000.00 etc.

If you can save $20.00 a week and you will have that first thousand dollars in less than a year.

Now the thing is this. People often talk about a Million dollars as being a lot of Mony. But really, do the math. Let's see what the flow-of-sums returns.

How much income per week will you have if you had one million dollars invested (not in spreads)?

You will find that you can easily exceed a Millionaire's income with a small amount of trading capital, perpetually in seasonal spreads.

Ok what is the minimum trail to your first successful trade. At a minimum

1. "Reminiscences of a stock Operator," "Reminiscences," gets into the details of Speculation and details you must thoroughly understand if you are considering making a living Speculating in securities.

2. "Ross's Spreads and Seasonals," for in-depth technical analysis and trading tactics.

With these tools, You should soon be able to enter and exit your first seasonal spread at a profit.

Best book for trading Seasonal Spreads.
Joe introduces filters and how to use technical indicators. You should update to Lane's %D Stochastics. This is a trading manual not a book about trading. ... Read more

Book Description

Praise for Real Options Analysis

"This book is a must-have and must-read . . . Mun’s new book is a refreshing, cutting-edge look at a powerful new decision-making process . . . it isn’t often you can truthfully say a book breaks new ground, but [this book] has certainly done that."
–Glenn G. Kautt
President, Monitor Group, Inc. (USA)

"Many books on real options can be intimidating. Mun offers a pragmatic, reliable, and entertaining guide. Complex concepts and formulas are brilliantly interspersed with well-chosen examples and step-by-step walk-throughs from a variety of industries."
–Shota Hattori
President and CEO, Kozo Keikaku Engineering, Inc. (Japan)

"The clarity and comprehensive coverage makes it one of the best guides for all practitioners . . . coupled with state-of-the-art financial tools on CD-ROM."
–Michael Sim
Partner, Moores Rowland International (Hong Kong)

"Mun certainly has earned the reputation of being an expert on the subject . . . consultants, analysts, decision-makers and engineers will be all over this book and its software."
–Phyllis Koessler
Managing Director, Koessler and Associates (Switzerland)

"Finally, a real options analysis book that is technically sophisticated enough to be useful, and practically written so that it can actually be used. It is destined to become the handbook of real options."
–A. Tracy Gomes
President, Intellectual Property Economics, LLC (USA) ... Read more

Reviews (11)

Real Options Analysis Review
"Dr. Mun has converted his tacit financial knowledge into a digestible user-friendly book. He effectively leads the reader on a solid path starting from Discounted Cash Flow, progressing through Monte Carlo analysis and evolving to Real Options to get even closer to the target of achieving confident corporate decisions. His ability to clearly explain the relationships of popular competing analysis methods will make this a must have reference book for today's decision makers."

Kenneth English

Director of Research and Development Emerging Technology.

Real Options in Action
This is an excellent text on Real Options Analysis. There is a definitive very well maintained balance between theory and practice. Dr. Mun will take you through a random walk, which is so natural and so powerfully pragmatic you will appreciate by the time you'll reach the final pages of the book. The powerful intuition Dr. Mun develops behind stochastic calculus and Ito's lemma makes it accessible and useful to the businessman who has to learn how to mitigate downside risks while optimizing growth opportunities in an uncertain economy. The book in itself is a real option - The mathematics is nicely explained only when needed for clarity of the subject. The abundant amount of reference is there for you to find out if interested. It is up to you to decide when you wish to exercise your options. If you can identify your real options, Dr. Mun will show you how to value those complex opportunities.

An excellent book for intermediate reader
Mun's book is an excellent guide for those who have basic knowledge about asset valuation and want to study real options.

decent read on real options
decent read... did a good job on explaining practical uses of real options. would have been better if not so much written promoting the use of crystal ball. overall, happy to see that minimizes coverage on replicating portfolios and focuses on risk neutral prob. i recommend this book, especially if mba student and brief coverage in intro class of real options leaves you interested / unfulfilled.

This book is made to trick you to buy the software
Mun's book is excellent, but you should not buy it unless you are willing to buy the...software used extensively in the book.

The CD-ROM enclosed with "Real Option Analysis" includes

- the Real Option Analysis Toolkit (demo), which expires one week after installation.

- the Crystal Ball Software, which expires one mounth after installation.

This means that you have to buy the expensive software one week after installing the demo to have any benefit from the book...The book is a trick to get your to buy the...software -and it is a shame that you get no information of this before you find out that the demo has expired! ... Read more

Book Description

The must-have book for all futures traders

In Fundamental Analysis, the legendary Jack D. Schwager has produced the most comprehensive, in-depth book ever written on the use of fundamental analysis for futures trading. In what is destined to become the bible of the futures industry, Schwager has poured out insights gathered during his long career as a trader, researcher, bestselling writer, and highly regarded authority in the field.

This book is packed with invaluable information you'll use every trading day. "Futures guru Jack Schwager has created the definitive source on using fundamental analysis for price forecasting that no trader can afford to be without." —Tom Baldwin Chairman, Baldwin Group

"This book won't make you a great commodities trader instantly, but it will teach you what you must know to start." —Jim Rogers Author, Investment Biker

"Jack Schwager always provides clear and compelling material on the often opaque subject of futures trading." —Richard Dennis President, Dennis Trading Group

"Jack Schwager's deep knowledge of the markets and his extensive network of personal contacts throughout the industry have set him apart as the definitive market chronicler of our age." —Ed Seykota

Fundamental Analysis is the first book in the Schwager on Futures series—the definitive source on the futures market for the next century that no trader will want to be without.

Jack Schwager is one of the most important and visible figures in the futures industry today. His Market Wizards and New Market Wizards are two of the bestselling finance titles of all time. Now Schwager has created the most comprehensive guide ever for using fundamental analysis for futures trading. The much-awaited Schwager on Futures series greatly expands and updates material first contained in his A Complete Guide to the Futures Markets, which has been the bible of the industry for the past decade.

In this first volume of the series, Fundamental Analysis, Schwager shows traders how to apply analytical techniques to actual price forecasting and trading in virtually all futures contracts currently traded. In chapter after chapter, Schwager draws on what he has learned during his legendary career as a successful trader, researcher, and bestselling investment author to dispense priceless insights.

Explains how to apply the techniques of technical analysis to fundamental data—information not found elsewhere

• Shows how regression analysis works and tells how to use it as a tool for price forecasting
• Includes step-by-step instruction on how to build a forecast model
• Contains a 13-chapter section illustrating the applications of fundamental techniques to individual markets and market groups
• Outlines how to analyze seasonal fluctuations, including seasonal price charts of 27 active markets

Numerous charts, tables, and examples illustrate all key concepts, and the text itself is written in the clear, nontechnical style that has helped make Jack Schwager one of today's most widely read and highly regarded investment writers. ... Read more

Reviews (4)

Schwager is very indepth...sometimes too indepth.
This is the most comprehensive books on Fundamental Analysis that I have ever seen. This book along with Schwager's Technical Analysis book are required reading for new futures brokers that I hire to my firm.

Mr.Schwager and Mr.Turner have put a very strong mathematical spin on how fundamental analysis can be accomplished. They dissect government trade reports and analyst reports and put an empirical face on the nebulus act of fundamental analysis.

In the preface of the book Mr.Schwager admits that fundamental analysis is not quite accurate. Which begs the question, "why write such a complex book?"

This book is not for the faint of heart, nor is it light reading. It is quite indepth and for the most part above the heads of many beginning futures investors. In order to understand any of the examples you have to have solid trading reference points in your personal trading life.

I recommended it for intermediate traders primarily.

After being involved with futures for 11 years and authoring three books on the subject, I am always impressed at Mr.Schwager thoroughness in researching.

caveat emptor
There is no question that when it comes to informational books on trading, Schwager is the best around. This book meets his high caliber of quality and informativeness. I can recommend this book to anyone looking to broaden their knowledge of fundamental analysis and the guts of what affects supply and demand. But I can't recommend the book wholeheartedly because basing trading decisions on fundamental analysis in itself is such a flawed approach in my opinion.

I used to pay a lot of attention to fundamentals. I would spend hours each day looking at news and research to get a feel for the reasoning behind the movement. After doing this for a while, I realized the inherent futility in the approach- if a trade sets up technically I will take it, unless there is some compelling reason not to, and if there is no technical confirmation, I won't take it, period- and so fundamental analysis just doesn't play much of a role in either case. Nowadays, I still keep tabs on fundamentals somewhat, but mainly only to avoid getting hit by a train- not taking action in front of a significant report or going short coffee in the freeze season, stuff like that. Below are a few reasons why my trading has become solidly technical:

1) Most daily news is worthless, and here is why: at any given time, there are half a dozen arguments for being bearish on a market, and half a dozen reasons to be bullish. When a market has a big move up and the reason isn't clear, the news services pick a couple of the bullish reasons and talk about those. If the market has a move down, they highlight some of the bearish reasons. It's total retrofitting, and thus usally a waste of time to read because there's usually not really a way to turn that knowledge into profit. The "traders" that the newsies interview are often just run of the mill clerks or brokers who don't really know anything special- or if they do, they don't tell. The classic filler explanations on the aftermarket newswires are "profit taking," "fund buying" and "fund selling." When you read about one of those three, the general translation is that the reporter dragged out one of the old standards because "who the heck knows" just doesn't make good copy.

2) Many of the best trades are the ones where the move starts before anyone knows why. Bruce Kovner talked about this concept in the first Market Wizards. (Incidentally, Kovner was making 300 million a year in profits at one point, so he might be worth listening to). If a breakout occurs when everyone is expecting it, then everyone is in already, and the odds are not as good because a lot of the buying (or selling) is already done. But if a breakout occurs and no one knows why, then there are (1) potentially powerful hidden reasons for the move, and (2) a whole group of traders who are not in the market yet and may want or need to get in (or out if the move is against them) once the reason comes to light. So, by deduction, if some of the best trades are the ones where the fundamentals reasons are not yet clear, then by paying attention to fundamentals too much, you run the risk of keeping yourself out of the best trades. You have to be willing to say, "I don't know why this setup is occurring, but the technicals are tellling me something that the news might confirm later." Because the news often comes after the window of opportunity has already closed, you often have to be willing to act before the fundamental reasons are clear.

3) Analysts are often biased and have a hesitancy to change views. When an analyst writes down his opinion on a piece of paper and then sends it out for everyone to see, part of his pride and reputation is staked on that opinion. It is a psychological fact that writing something down, and confirming something to other people, makes a person more committed to that belief because humans have a very strong desire to be consistent. That makes him very hesitant to change his mind, even when the facts change. If an analyst is bullish one week and then the facts turn bearish the next week, the analyst should change his mind- but the odds are that he will not, because he will be thinking "well, if i was bullish last week and do a 180 to bearish this week, then I will look stupid." But often that is the right thing to do! Especially for fundamental analysis, being flexible is very important. But most analysts are too worried about their reputations to have that flexibility. This is one reason trends occur, because the masses are hesitant to change their minds even when it is rapidly becoming clear that they should.

4) Much of fundamental analysis is either incomplete or just plain wrong. Even if you have 90% of the puzzle pieces, the 10% that you are missing could be important enough to turn the whole picture upside down. Or if you somehow miraculously have all the pieces, you still have to figure out how to weight them properly and determine what the market is going to pay the most attention to. It is almost impossible to get all the facts correctly uncovered and assembled without overlooking anything. And then there is always the possibility that something could come up by surprise that you were not prepared for. Different analysts with access to the same information will often have directly contradicting opinions on a market. What does that tell you? Generally the only time that the analysts are all on the same page is when the writing on the wall is obvious- and by that time, the move is usually almost done if not over. There is simply no free lunch.

5) Price- the ultimate value judgment of all underlying fundamentals- reveals itself in the technicals. The technicals don't lie and the technicals don't have an emotional bias. They represent the opinions of the entire market, with a heavier weighting towards the bigger and smarter players, and are thus more reliable than individual opinions subject to bias and error. For a fast mover such as myself, this is what needs to be known. I'm interested in the next three days, not the next three months or years.

For the above reasons, fundamental traders caveat emptor.

A MUST FOR WHOEVER WANTS TO START IN FUTURES TRADING
This Series "Schwager on Futures" is the biggest work has ever been written on futures trading. As a Futures Trader I advise everybody to read these books before to starts any real trading in Futures, that if not taken in the proper way can be very painfull. As a Member of IFTA(International federation Of Tecnical Analisys)I suggest you to read it joint with John Murphy's "Technical Analisys f Futures Markets" and "Intermarket Technical Analisys" this will give you a integral knowledge of Futures Environment that is what you need on your Trading philosophy. I always let these books on my desk because I need them so many times during my trading day. THEY ARE A REAL REFERENCE. The good thing of this series is that you can test your comprension by the various study guides. Reading the book about "Managed Trading" You can even get able to judge the returns of the various CTA and decide when it is better to invest in them and to whom give your money.Probably you are not be interested in the Fundamental analisys book but remember, especially in the commodities markets, EVEN IF YOU ARE GOING TO TRADE TECHNICALLY IS VERY IMPORTANT TO UNDERSTAND FUNDAMENTAL ANALISYS!!! Thank you very much to have spent all this time for read me.

A must read!!
Jack Schwager is an excellent author and researcher. His Wizard Trading Fund is certainly not one of the best around, but the man's ideas must be respected. There is a lot of usefull information in this book even if you are a purely technical trader. Most but not all markets are treated in this fine volume. ... Read more

Amazon.com

"The longest bull market in history" is a term that gets used a lot these days. Since 1990, the Dow Jones Industrial Average has risen some 8,000 points, from around 2,700 in January 1990 to nearly 11,000 today--a boom by anyone's standards, including Edward Chancellor's. In Devil Take the Hindmost, Chancellor takes an entertaining, albeit sobering, look at the history of speculative manias and the mass delusion that surrounds them.

Beginning with the "tulipomania" that gripped Holland in the 1630s, Chancellor chronicles the formations and irrational euphoria that can inflate markets, from shares of South Sea stock in England in the 1720s to real estate in Japan in the late 1980s. He characterizes the speculative spirit as one that

loves freedom, detests cant, and abhors restrictions. From the tulip Colleges of the seventeenth century to the Internet investment clubs of the late twentieth century, speculation has established itself as the most demotic of economic activities. Although profoundly secular, speculation is not simply about greed. The essence of speculation remains a Utopian yearning for freedom and equality which counterbalances the drab rationalistic materialism of the modern economic system with its inevitable inequalities of wealth.

Chancellor makes Devil Take the Hindmost especially relevant to today's U.S. investors by using his analysis of past speculative manias as a lens through which to view the current bull-market binge. No matter what his or her current investment outlook is--bull or bear--anyone with capital to invest would do well to spend a thoughtful weekend with this book. Highly recommended. --Harry C. Edwards ... Read more

Reviews (49)

Well written, informative, and informed!
For everyone interested in macroeconomic development and, of course, financial "speckulation" (read the book and you'll understand), this is required reading. Splendidly written and very informed--as one would expect from an Oxbridge educated lad, writing for the FT and The Economist--the author is able to pull of an exciting journey through the very early beginnings of speculation and to describe more thoroughly the most important bubbles; their origins, their devleopment and their ending. Most striking is the many parallels and the never ending belief of speculators in a "new" era, where old measures, a good biz plan, earnings and profits for a company (or "fundamentals") can be easily neglected for promises in the future due to a "new economy" where everything has changed. Sounds familiar? Well, ask the British in the late seventeenth hundreds...

Well written, rich in information and well balanced
For everyone interested in macroeconomic development and, of course, financial "speckulation" (read the book and you understand), this is required reading. Splendidly written and very informed--as one would expect from a Oxbridge educated lad, writing for the FT and The Economist--the author os able to pull of an exciting journey through the very early beginnings of speculation and to describe more thoroughly the most important bubbles; their origins, their devleopment and their ending. Most striking is the many parallels and the never ending belief of speculators in a "new" era, where old measures, a good biz plan, earnings and profits for a company (or "fundamentals") can be easily neglected for promises in the future due to a "new economy" where everything has changed. Sounds familiar? Well ask the Brits in the late seventeenth hundreds...

Speculation: A Necessary Scourge?
Published at the height of the 1990s technology bubble and two years after the onset of the Asian financial crisis, "Devil Take the Hindmost" offers a remarkably insightful examination of historical asset bubbles. Chancellor first takes us to ancient Rome, where currency crises were the norm due to currency speculation, and where the Forum Romanum served as the venue for shady deals in stocks and bonds. Indeed, speculation as an economic activity was ab urbe condita, or literally since the founding of the city of Rome. He then takes us to Venice circa the Middle Ages, where, in all probability, some of the earliest instances of insider trading took place. A spectacular panorama of financial shenanigans then unfolds, chapter by chapter: the overblown demand for tulips in the Netherlands during the 17th century; the British debt conversion scheme during the 1700s which led to the South Sea bubble; the Gilded Age in the US; the Wall Street crash of 1929; and the bursting of the Japanese economic bubble.

Speculators absorb risk and provide liquidity in the marketplace. Arguably, their insight into market fluctuations and their intrepidity in assuming risk help lower the bid-ask spread of a certain asset. Speculation itself is not demonstrably malevolent, but is an intrinsic component of a functioning asset market. But at many junctions in history, as Chancellor prolifically demonstrates, excessive speculation had reached a point wherein prices had ceased to serve as useful signals of the intrinsic value of an asset.

Chancellor contends that speculative activities, at their crescendo, are intrinsically irrational, and convincingly argues that asset markets all too often went to excess. The potential for amassing gains through trading and speculation are nearly limitless, yet the soc