Customer Reviews

The Bear Book: Survive and Profit in Ferocious Markets

5 star:		(6)
4 star:		(4)
3 star:		(1)
2 star:		(1)
1 star:		(1)

 

 

John Rothchild has done a great job of outlining and explaining what bear markets are, what leads to them, what to expect in bear markets, and when to expect them, and what to do to survive and profit when faced with a bear.

Rothchild explains under what circumstances the mantra of "buy and hold" would work and when it doesn't work. He also destroys another present-day myth that earnings and stock-prices march in lockstep (they don't -- surprise!)

There are sections devoted to the various other players in the markets -- the Cassandras, the Doomsday best-sellers, New Era thinkers, eternally bearish newsletters, Fed Watchers, and the "Magazine Cover Jinx" phenomenon. I think Rothchild does a very fair job in evaluating all the above.

Rothchild comments at length on whether or not there is any truth to statements that the world's fortunes are linked as never before (something the investors kept hearing repeatedly until the Asian crisis in 199! 7, when "the tune changed").

Next, Rothchild goes on to suggestions on how to "bear proof the portfolio". He lists sectors that are expected to do better than the market when things turn bearish. He also examines the relative merits of cash, bonds, gold and stocks that pay dividends, and how they can be expected to fare when things get tough.

And coming out of a bear, where should one invest? There is an interesting chapter, titled, "Jumping On The Next Bull" that has some very useful advice on what to do in such a situation.

Rothchild also demolishes the myth that is harbored by many of today's investors that their mutual fund managers know how to bail them out. Most of them will fail to do so. However, Rothchild provides information on how mutual fund investors can improve their chances, in the chapter "Bear-friendly funds"

Finally, the book has interviews with three "survivors" from the Crash of '29 ! -- three nonagerians who are still actively managing money ! today!

On the downside, the author seems to overstate the bearish case. Whenever he refers to market indexes making highs and then getting back there after a downturn lasting several years, he uses the raw index numbers and doesn't take dividends into account, even though he doesn't forget to take inflation into consideration. Bear markets are scary enough that Rothchild needn't have made them look any scarier!

Also, some of the figures seem to be inaccurate -- the graphs and the explanations don't seem to agree with one another. And there are a few typos here and there.

All in all, this book is very useful as it helps investors get a glimpse of the darker side of the markets and deserves to be on the bookshelf of every investor.

I had the chance recently to read "A Fool and His Money" by the same author, and enjoyed it: he described a comic series of mishaps as he sought to replace employment by investing. (A similar book about a pilot investor losing all in a few years appeared around 1960).

I tend to be a bear by now, so I thought I would agree with this book. The surprise for me was the anecdote-filled journey through markets of the last century - the ups-and-downs come alive in this book. He has a wry chapter where he points out that "Profit from the coming collapse" books appear every year or two, rain or shine, for the last 15 years; in that sense 1998 is more of the same. The author is a Harpers/Atlantic type journalist who aims to be erudite and entertaining at the same time.

No, he doesn't have secret advice on how to make a killing by shorting stocks now (he covers the most recent bear funds like 'Prudent Bear' of David Tice). He explains why hedge funds may not work, may soak huge commissions, and why bears & shorters are tax-disadvantaged.

Another witty chapter is "Where are the Bears' Yachts?" - even the brightest <can't> consistently pick the sorriest guaranteed future losers and win millions by shorting them.

I am an attorney who specializes in reorganizing publicly-held companies under chapter 11 of the Bankruptcy Code. So I tend be be cautious by nature when it comes to investing and do in fact believe a bear market is imminent. However, I was terribly dissapointed with this book and found it to be a complete waste of time.

It's level of analysis consists of:

1. Stocks go up in bull markets. 2. Stocks go down in bear markets. 3. Nobody knows when a bear market will come.

Well, duh.

The book does not purport to advise readers how to predict a bear market, how to invest in anticipation of a bear market, or even what to do in a bear market. (On this point, the book says, in effect, sometimes bonds are good, sometimes they aren't).

So what was the point of the book? To cash in on the current wave of interest in books on investing.

Save your money.

When I found this book at the bookstore and glanced within, I couldn't put it down! John Rothschild draws from history to characterize US bear stock markets (from the late 1800s until publishing date in 1998). He presents the information in a witty, light-hearted, sardonic manner. The info is very up-to-date and insightful including analogies to the Japanese bear market in the 90s and the US bear markets of 1929, 1968, 1973, 1981, and 1990. The treatment of the Great Crash of 1929 was perceptive (e.g., it should be called the Crash of 1931). As a trader for the past 8 years who leans to the bear side, I relate very well to both the content of this book and the writing style. The author aptly notes, short-sellers have been cursed since the beginning of time itself; yet without them, bear markets would be more vicious and devastating. In a decline, it is the short-covering that holds the market and not the conventional wisdom of buying by cash-rich mutual funds. Hats off to the author for a delightful book!

John Rothchild's writing style is entertaining and the history of bear markets is a useful antidote for excessive bullishness. But don't be misled, the overall direction of the market over hundreds of years is up, you cannot have a succession of bear markets without intervening bull runs and the bulls run harder than the bears do, otherwise the market would not be higher now than a century ago.

I have read a large number of books about the market, most by market participants. One interesting feature of The Bear Book is that it gives context to some of those other writings. For example, I recently read William J. O'Neil's "How to Make Money in Stocks" which leaves you with the feeling that O'Neil is invincible. The Bear Book debunks that notion--good but not invincible. Another interesting tie in, Rothchild tells about the killing made on the bear side by "Marty Martino" (an alias?) of Morgan Stanley in 1987 when his six cent puts rose to $53 each. Marty Martino wouldn't disclose how much he made but Gregory Zuckerman tells the tale of John Paulson's $50 billion profit in "The Greatest Trade Ever." John Paulson went short mortgages via CDSs while Martino went short the market via puts.

This is not a how to book but a look at the bear side of the market. I believe all of us unremitting bulls will benefit from taking a look at the other side. I can recommend it.

I am a management accountant but still needed the global view of markets that this book eloquently describes. I began investing in 1992 and never paid attention to the market because I WASN'T IN IT. I have never seen a bear market up close, John really gave me a good look and a readable look. Now, I can study the markets with a broader understanding. Excellent book for me.

This is a history of various market declines and panics. Providing some useful insight, it is well written and deviates from the normal how to buy stocks book. If you want a good read and like stock market and finance books, you should like this.

The book provides a good introduction to bear markets for many readers who have never seen anything but blue skies.

Rothchild keeps the tone light, & even funny at times. It's an easy read, probably a lot easier than the reality of a bear market itself. If what's presented in the book is new to you, then hopefully you will have gained much from its reading.

The author did an eleguant and excellent descripton about the history of the bearish time that USA in general experienced.His knowledge of the world of investment is unquestionable but I was expecting some detail, maybe academic,point of vue about different vehicule of investment. NOT ENOUGH info.in HEDGE FUND.

Someone said that the book doesnt teach how to predict bear markets. I would rate it ridiculous if it aimed at that. No one can. (The market goes where it wants to go remember?)
Just like stop losses, shorts are a tool, learn how to use them.
This is not a pure technical book ,but it is probably one of the most enjoyable to read about this thing we all love: trading.
And if one recomendation is allowed on the technical side: Stock patterns for day trading and swing trading by Barry Rudd (No comissions here, lol)
Best regards