Post Modern Investment: Facts and Fallacies of Growing Wealth in a Multi-Asset World

338 Pages·2012·5.977 MB·English

by  Garry B. Crowder, Thomas Schneeweis, Hossein Kazemi

Postmodern
Investment
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Postmodern
Investment
Facts and Fallacies of Growing
Wealth in a Multi-Asset World
GARRY B. CROWDER
THOMAS SCHNEEWEIS
HOSSEIN KAZEMI
John Wiley & Sons, Inc.
CoverDesign:Leiva-Sposato
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Copyright(cid:2)c 2013byGarryB.Crowder,ThomasSchneeweis,andHosseinKazemi.
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LibraryofCongressCataloging-in-PublicationData:
Crowder,GarryB.,1954—
Postmoderninvestment:factsandfallaciesofgrowingwealthinamulti-assetworld/
GarryB.Crowder,ThomasSchneeweis,HosseinKazemi.
p.cm.
Includesbibliographicalreferencesandindex.
ISBN978-1-118-43223-5(cloth);ISBN978-1-118-48383-1(ebk);
ISBN978-1-118-48384-8(cloth);ISBN978-1-118-48385-5(ebk)
1.Investments.2.Portfoliomanagement.I.Schneeweis,Thomas.II.Kazemi,Hossein,
1954-III.Title.
HG4521.C8692013
332.6—dc23
2012030608
PrintedintheUnitedStatesofAmerica
10 9 8 7 6 5 4 3 2 1
To Jill
—Garry B. Crowder
To Alison
—Thomas Schneeweis
To Mahnaz and Maziar
—Hossein Kazemi

Contents
Preface xiii
TheCoreConceptsinManagingWealth xiv
PostmodernInvestment xvi
HowtheChaptersAreStructured xviii
AsYouBegin xix
Acknowledgments xxi
CHAPTER1
InvestmentIdeas:EvolutionorRevolution? 1
IntheBeginning 4
TheBeginningofInformationTransparency 11
NewMarkets,NewProducts,andtheEvolution
ofModernInvestment 17
NewOpportunitiesCreateNewRisks 18
TheMarketIsNotEfficientforEveryone 19
APersonalViewofModernInvestment 21
WhatEveryInvestorShouldKnow 23
MythsandMisconceptionsofModernInvestment 24
CHAPTER2
EquityandFixedIncome:TheTraditionalPair 31
ABriefReview 35
EquityandFixed-IncomeStylesandBenchmarks 36
BasicSourcesofRiskandReturn 36
Performance:FactandFiction 38
ReturnandRiskCharacteristics 39
TheMythofAverage:EquityandFixed-IncomeReturn
inExtremeMarkets 43
AnnualPerformance 46
Performancein2008 46
SpecialIssues:MakingSenseOutofTraditionalStock
andBondIndices 46
vii
viii CONTENTS
APersonalViewofEquityandFixed-IncomeAnalysis 52
WhatEveryInvestorShouldKnow 55
MythsandMisconceptionsofEquityandFixedIncome 56
CHAPTER3
HedgeFunds:AnAbsoluteReturnAnswer? 63
WhatAreHedgeFunds? 68
InvestinginHedgeFunds 69
HedgeFundStylesandBenchmarks 69
BasicSourcesofReturnandRisk 71
Performance:FactandFiction 73
ReturnandRiskCharacteristics 74
TheMythofAverage:HedgeFundIndexReturninExtreme
Markets 78
HedgeFundAnnualPerformance 80
Performancein2008 85
MakingSenseOutofHedgeFundIndices 85
MakingSenseOutofAlternativeApproachestoInvesting
inHedgeFunds 87
APersonalView:IssuesinHedgeFundInvestment 91
WhatEveryInvestorShouldKnow 95
MythsandMisconceptionsofHedgeFunds 96
CHAPTER4
ManagedFutures:AZero-SumGame? 101
WhatAreManagedFutures? 104
InvestinginManagedFutures 105
ManagedFuturesStylesandBenchmarks 106
BasicSourcesofReturnandRisk 107
Performance:FactandFiction 108
ReturnandRiskCharacteristics 109
TheMythofAverage:CommodityTradingAdvisorIndex
ReturninExtremeMarkets 113
CommodityTradingAdvisorAnnualPerformance 115
Performancein2008 120
MakingSenseofCommodityTradingAdvisorPerformance 120
MakingSenseOutofAlternativeApproachestoInvesting
inCommodityTradingAdvisors 124
CommodityTradingAdvisorInvestableIndices 125
APersonalView:IssuesinManagedFuturesInvestment 126