Moods and Markets: A New Way to Invest in Good Times and in Bad
- By Peter Atwater
- Published Jul 6, 2012 by FT Press. Part of the Minyanville Media series.
- Copyright 2013
- Dimensions: 6" x 9"
- Pages: 208
- Edition: 1st
- eBook (Watermarked)
- ISBN-10: 0-13-294726-9
- ISBN-13: 978-0-13-294726-8
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Product Author Bios
PETER W. ATWATER is President of Financial Insyghts LLC, a firm that helps clients understand key financial services issues and their economic impact. He helped build (and then led) J.P. Morgan's asset-backed securities origination business. Working with major auto finance companies, credit card issuers, and regional banks, he gained an intimate understanding of consumer credit and the accounting, tax and regulatory issues associated with securitization and structured finance. Earlier, as CEO of Bank One Private Client Services reporting to Jamie Dimon, he integrated the bank's businesses serving high net worth clients. He contributes regularly to Minyanville.com.
Leading consultant and Minyanville contributor Peter Atwater has helped institutional investors, corporations and policymakers map changing social moods to emerging market shifts, and use that knowledge to identify huge new market opportunities. Now, Atwater shows you how to use the same powerful Horizon PreferenceTM approach to select your own high-performance investments. Utilizing what is often in plain sight, but overlooked and underestimated, Horizon Preference helps you understand how we narrow our physical, time and relationship horizons to the "local" in bad times, and widen them to the "global" in better times – and then translate that knowledge into better investment decisions. Atwater’s Moods and Markets offers powerful new insights into everything from market bubbles to the real challenges of making mergers work… why "farm to table" and "locavore" movements are booming now, and what’s likely to happen next… why Americans now want to rent homes even though it’s become far more affordable to buy them… why the "Arab Spring" is bullish, and higher education is in deep trouble… which businesses prosper in a downturn, which prosper most in an upturn – and why. This book will be an invaluable resource for every serious investor, trader, and money manager.
Table of Contents
Foreword xix
Introduction 1
Chapter 1 Understanding Social Mood 11
Mood Defined 12
Mood Versus Emotion 14
Confidence and Our Perceptions of Certainty 15
The Continuum of Social Mood 20
Individual Versus Social Mood 24
Measuring Mood 25
Social Mood and the Media 28
Mood Groups 31
Final Thoughts 32
Chapter 2 Horizon Preference: How Mood Affects Our Decision Making 33
The Horizon Preference Continuum 35
Logical Decision Making in Periods of Rising Social Mood 39
Logical Decision Making in Periods of Falling Social Mood 45
Opportunities During Declining Social Mood 50
Final Thoughts 52
Chapter 3 Market Peaks and All the Red Flags They Wave 55
The Concept Stock Bubble 56
Big Truths 58
Abdication of Risk Management 59
Organizational Complexity 61
Novice and Naïve Entrants 62
Credit, Architecture, and Other Signs of the Top 63
Why Investment Peaks Are Different 68
After the Peak 70
Final Thoughts 71
Chapter 4 A Social Mood Journey Back Through the Housing Bubble 73
Modern Housing Finance 75
A Big Truth 78
Abdication of Risk Management 78
Organizational Complexity 80
Novice and Naïve Entrants 82
Excessive Credit and Architecture 83
Final Thoughts 84
Chapter 5 Is Higher Education a Bubble? 85
A Big Truth 85
Abdication of Risk Management 88
Organizational Complexity 91
Naïve and Novice Participants 91
Excessive Credit 92
Architecture 93
Final Thoughts 95
Chapter 6 Signs of a Bottom in Social Mood 99
Extreme “Me, Here, Now” Behaviors 100
Hoarding Behaviors 101
Acts of Sacrifice 104
Event Versus Cycle Lows 108
The Market Low of 2002 109
The Market Low of March 2009 110
The Market Bottom of 1932 112
Seeing Major Market Bottoms in Real Time 113
Social Mood and Invention 115
Final Thoughts 120
Chapter 7 Cooking the Books: Corporate Earnings and Social Mood 121
Mood-Driven Accounting Principles 122
Mood-Driven Management Judgment 125
Mood-Driven “One Time” Charges 130
Final Thoughts 133
Chapter 8 Social Mood and the Markets Today: So Where Are We? 135
Modern Day Extremes in Social Mood 139
Communication and Transportation Innovations and Peaks in Social Mood 141
2000 to 2012: Deteriorating Mood 142
Plotting Social Mood 145
A Long-Term Perspective on Social Mood and Stock Multiples 148
Social Mood and the Evolution of Major Corporations 150
Peak Social Mood and Sovereign Debt 154
Final Thoughts 156
Chapter 9 Using Horizon Preference No Matter Your Long-Term View 159
Final Thoughts 166
Chapter 10 Final Thoughts 169
Bibliography 171
Index 175
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