Cocktail Economics: Discovering Investment Truths from Everyday Conversations (Hardcover)

by Victor A. Canto (Author)
Key Phrases: cocktail economics, inelastic stocks, elastic companies, Wall Street, New York, Federal Reserve (more...)

Editorial Reviews

Product Description
What can moonshine, mountain climbers, power plants, salmon, football players, and well-known celebrities teach you about investing? More than you ever imagined! Through entertaining, easy-to-understand anecdotes, analogies, and examples, Canto reveals why the most successful investment strategies reflect a balance of active and passive approaches. You'll learn how to 'read' economic cycles, identifying the specific asset classes most likely to outperform in tomorrow's business environment. Construct and optimize your winning investment plan, step-by-step, from start to finish! MAKE HAY WHILE THE SUN SHINES

The case for predicting, forecasting, and timing

PASSIVE INVESTING? ACTIVE INVESTING? NO. BOTH.

Why you need to take both sides in the never-ending debate

ELASTICITY: CATCH IT IF YOU CAN

Putting industry behavior to work for you

CALIFORNIA, FRANCE, AND THE 'LOCATION EFFECT'

Investing internationally in the age of globalization

TURN -SMOKE- INTO -SIGNALS-

Making the most of publicly available price data

YOUR PORTFOLIO VS. THE GOVERNMENT

Anticipating and responding to regulations and taxation

TILT TOWARD SUCCESS, ONE STEP AT A TIME

Build your benchmark portfolio, then optimize it for changing environments

Victor Canto reveals exactly how the economy affects markets and how to 'read' business cycles so you can profit from every shift in the business cycle. Among the topics covered: investing internationally in the age of globalization; transforming price data into usable market "signals"; anticipating the impact of regulations and taxation; and more. From start to finish, Canto's focus is practical, and his focus is simple: outstanding investment results.

--This text refers to the Kindle Edition edition.

From the Back Cover
"Successful investors are those who can pick the right investments for different economic conditions. It's like matching wine with food. In this book, Victor Canto is both your star chef and sommelier. Don't be afraid to put Cocktail Economics to work today. You'll find that two-star investing has become a four-star endeavor." -Charlie Parker, financial maven and former Chief Financial Officer of Continental Insurance "Victor Canto's insight and uber-rational approach will forever change the way you look at risk and return. Perhaps equally important, he'll make you a better economic and political thinker. No one has a greater understanding of how marginal changes in world economics and politics impact portfolio holdings." -Neil Rose, CFA, CIO Cadinha & Co. "I count Victor Canto among today's best and smartest investment advisors. He has made money in both the good times and bad for many a satisfied client. With this book, he has now done all investors, including myself, an important service: He has written a widely accessible book about the marriage of economics and investing, and the crucial ties that bind the two. It's the story of how big ideas make the investment world go round." -From the Foreword by Dr. John Rutledge, Chairman, Rutledge Capital, LLC What can moonshine, mountain climbers, power plants, salmon, football players, and well-known celebrities teach you about investing? More than you ever imagined!

Through entertaining, easy-to-understand anecdotes, analogies, and examples, Canto reveals why the most successful investment strategies reflect a balance of active and passive approaches. You'll learn how to "read" economic cycles, identifying the specific asset classes most likely to outperform in tomorrow's business environment.

Construct and optimize your winning investment plan, step-by-step, from start to finish! MAKE HAY WHILE THE SUN SHINES The case for predicting, forecasting, and timing PASSIVE INVESTING? ACTIVE INVESTING? NO. BOTH. Why you need to take both sides in the never-ending debate

See all Editorial Reviews

Product Details

• Hardcover: 336 pages
• Publisher: FT Press; 1 edition (May 17, 2007)
• Language: English
• ISBN-10: 0132432730
• ISBN-13: 978-0132432733
• Product Dimensions: 9.1 x 6.3 x 1.3 inches
• Shipping Weight: 1.4 pounds (View shipping rates and policies)
• Average Customer Review: 4.2 out of 5 stars See all reviews (5 customer reviews)
• Amazon.com Sales Rank: #477,967 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

20 of 20 people found the following review helpful:

5.0 out of 5 stars Economics and Investments, July 2, 2007

By	Peter M. - See all my reviews

It seems that many recent books on economics, while no doubt entertaining, pertain less and less to our everyday lives. Sure, it is fascinating learning that sumo wrestlers cheat in Steve Levitt's Freakonomics, but how can I apply this newfound economic knowledge for my personal benefit?

It is here that Victor Canto's Cocktail Economics scores big where many contemporary economic books miss the mark. The book applies sound economic principals to where many of us need the most help: our investment portfolios.

Not only are we sold on the importance of investing, but we are taught how to use economics to improve our investment performance at the margin. Topics like inflation, taxes, globalization, regulation, technological advances, and more are presented clearly and shown how they can affect our investment decisions like stocks vs bonds, large-cap vs small-cap, value vs growth, and investment choices among various industries.

As an example, in Ch. 4 Canto provides a fascinating case study of changes in the airline industry over the past few decades. With deregulation in the late 1970s, airlines moved from an inelastic industry to elastic one, a change that investors watching beta would have missed. The business model of companies like Pan Am would no longer be as successful as it was in the past. As it played out, in the decade that followed deregulation airline stocks gained 36% compared to 181% for the market as a whole.

This book is especially relevant in today's world of ETF where individual investors can quickly and cheaply modify their portfolios to profit from a changing economic environment. An easy read with examples you will both remember and be able to employ in your portfolio, this book makes a great buy.

1 of 1 people found the following review helpful:

1.0 out of 5 stars "A rose by any other name...", August 27, 2008

By	Trevor Cross "persepolis" (Hingham, MA United States) - See all my reviews

I am a bit perplexed by the positive reviews for this book.
First of all, the title is a misnomer---the subtitle is "Discovering Investment Truths from Everyday Conversations". The only "conversation" is the one the author has trying to convince you that by using his "if-then" models of beta and elasticity you can predict the effects of various exogenous events ("policy shocks" is his preferred term) on stock prices. By adjusting your allocations accordingly, you can beat market returns. When you cut to the chase, he is advocating a form of market timing. There are many superb academic studies that have shown the fallacy of this approach.
To give just one example, on pages 226-230, he inveighs against the Carhart/Sinquefield study for comparing cap weighted index funds to a portfolio of equal-weighted managed funds. He then goes on to state mathematically self-evident conclusions such as "if we apply a cap weight to the performance of these funds, we will identify a 50/50 weighted split of over and under-performance" and that "sometimes one or a few funds will generate this outperformance". He then states that it is "my belief that an opportunity exists to locate them" (referring to these market beating "winners"). But he seems to be missing his own point--he never shows (with any hard data) how a portfolio of cap weighted (not equally weighted) actively managed funds would have changed the conclusions of the Carhart study (presumably in support of his thesis). Instead, the reader is left guessing. Furthermore, he never provides the hard data to show that his system of reallocation based upon his methodology of beta and elasticity analysis is superior to a diversified portfolio of low cost index funds reallocated based upon age and risk profile (if he did, I missed it). He cavalierly addresses the impacts of transactions costs, taxes and turn-over.
There are other problems with this book---the effects of survivorship bias, behavioral aspects of risk aversion and correlation vs. causation.

5.0 out of 5 stars Great book., December 16, 2008

By	W. Kudlata "BK" (USA) - See all my reviews (REAL NAME)

I majored in Econ many years ago. It was fun catching up.

It would also be a good place to start for the many who have no understanding of basic economics.