How did an investment advisory firm in obscure Elkhart, Indiana, find the antidote to remain rational in the highly contagious speculative pandemic of the late 1990s? At that time the crowd of true believers, in what was to become the Great Bubble, was swelling exponentially to number in the millions as irrational exuberance reached full flower. From the ill-equipped wage earners on the factory floor deluded by slick pitches evoking images of 401(k) financial independence to the institutional investors, the fate was often the same-except for the parasites who were knowingly complicit. When the Great Bubble inevitably imploded, few were spared the financial fallout. Speculative Contagion is an insider's riveting real-time and real-money account of the inflating Bubble, accented with the genuine suspense to be found only in real-life drama. The epidemic of tech-driven lunacy gradually affected more and more feverish investors all too prone to be infected by the insidious absurdity of the times. In the midst of it all, Frank Martin found sanctuary in the treasure trove of history. As he reflected on the unremitting succession of other departures from reality in the past, along with the madness of crowds, he was able to grasp shreds of sanity, at least partially muting the Sirens' call of speculative contagion. Spared the emotional devastation and accompanying paralysis that shocking losses inevitably and cruelly visit upon the unprepared, Martin commanded the capital and the conviction to be able to step up to the plate and lay wood to the fat pitches that at last came floating his firm's way. While the path to investment success is arduous at best and assured for no one, the eye-strained yet battle-hardened reader-from student to amateur or seasoned investor to rattled professional-is forearmed by this book to face the future with a short list of foundational antidotes. Rationality is their common thread. We can thus combat the ill effects of whatever may yet come at us from the perilously unorthodox and persistently unrepentant current episode, as well as those that lie in wait beyond the horizon. With both colorful anecdotes and timely antidotes coming as thick and fast as baseballs to a hitter in batting practice, the reader is in for a delightful and eye-opening romp through an extraordinary era in U.S. financial history.
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15 of 15 people found the following review helpful:
5.0 out of 5 stars
Dispatches from the front line of investing,
This review is from: Speculative Contagion: An Antidote for Speculative Epidemics (Hardcover)
Every so often someone will ask me which I consider the best investments books. This is not an easy question to answer, firstly there is an enormous amount written on finance every year (much of it pure junk, of course), and secondly if you miss off someone's personal favorite they take it as a personal affront. So it was with some trepidation that I put together my ideal investors reading list. In my "modern" category (to qualify to be in this section the book must have been written within the last ten years, but have the potential to become a classic given time), I included Frank Martin's Speculative Contagion, which is a book that represents an investor's real time experience of dealing with the market. Several books could have fitted the bill; Cunningham's edited version of Buffet's letters was a front runner (The Essays of Warren Buffett), as was Chancellor's edited version of Marathon Asset Managements' views (Capital Account). However, in the end I settled on Frank Martin's Speculative Contagion. This book pulls together the annual reports that Martin had written to his clients throughout the bubble and burst years. It is source of much investment insight. I recently used Martin's trinity of risks as a basis of a better way of thinking about the nature of risk from an investment perspective. Martin's book provides us with opportunity to see exactly how bad it feels to be on the wrong side of a bubble, but also delivers insights into the discipline needed to stick to sensible investment process though thick and thin.
2 of 3 people found the following review helpful:
4.0 out of 5 stars
The Next Chapter in Extraordinary Popular Delusions and the Madness of Crowds,
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This review is from: Speculative Contagion: An Antidote for Speculative Epidemics (Hardcover)
Frank Martin's Speculative Contagion takes one on a real time basis of the nearly 7 year episode of the delusions of the ".com" bomb run up to, and its subsequent bust. Much like reading the "Extraordinary Popular Delusions and the Madness of Crowds", by Charles Mackay saved many from the hyperbole of the ".com" phenomenon, maybe this book will save you from the next episode of the Madness of Crowds.
In addition to providing one with the history of the market and the psychological episodes, it is also full of Benjamin Graham and Warren Buffett anecdotes throughout. Also in Chapter 8, What History Teaches, the author provides us with some potential antidotes for future speculative epidemics, with such headings as: - Free Markets: Popular Delusions and the Madness of Crowds - Aspiring to Rationality by Overcoming Heuristic Biases - Today Is Not Tomorrow: Cycles and Differing "Opportunity Sets" - Inverting the Traditional High-Risk/High-Return Paradigm - The Inevitability of Regression to the Mean - There Are No Called Strikes in the Investment Ballgame - Focus on the Important - The Malevolent Mathematical Mystery of Modern Money Management (i.e. MPT) - The Absurdity of the Collective Wisdom of Individual Irrationality - Diversification and the Myth of Safety in Numbers All in a very historical and insightful review of the Bubble and post-Bubble years.
2 of 3 people found the following review helpful:
5.0 out of 5 stars
A Must For Your Investment Library,
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This review is from: Speculative Contagion: An Antidote for Speculative Epidemics (Hardcover)
This is a very well written book that captures the essence of common sense value investing. The book highlights the importance of independent/non-lemming thinking the is required to be a successful value investor. Very few people can achieve this mentality. This book will help you think on your own - a vital trait for being a successful investor. A must have for your investment library. You will not be disappointed.
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