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Unexpected Returns: Understanding Secular Stock Market Cycles Hardcover

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Unexpected Returns: Understanding Secular Stock Market Cycles + Probable Outcomes + The Little Book of Bull's Eye Investing: Finding Value, Generating Absolute Returns, and Controlling Risk in Turbulent Markets
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Product Details

  • Hardcover: 296 pages
  • Publisher: Cypress House; First Edition edition (April 2005)
  • Language: English
  • ISBN-10: 1879384620
  • ISBN-13: 978-1879384620
  • Product Dimensions: 9.3 x 6.4 x 1 inches
  • Shipping Weight: 1.7 pounds (View shipping rates and policies)
  • Average Customer Review: 4.4 out of 5 stars  See all reviews (45 customer reviews)
  • Amazon Best Sellers Rank: #218,276 in Books (See Top 100 in Books)

Editorial Reviews

From the Publisher

"Ed Easterling has given the world of investing the single best, easy-to-read, study of stock market cycles of which I know. He lays out a path for you to find your own Unexpected Returns, showing you how to confidently navigate the waters of market volatility. Serious investors will devour this book and profit. It should be required reading for investment professionals."

- John Mauldin, President, Millennium Wave Investments; author of Bull's Eye Investing

"Unexpected Returns provides a broad, deep, and provocative exploration of the factors that determine stock market investment returns over a person's lifetime. Of special interest to me, as a Federal Reserve policy advisor on monetary policy, is Easterling's exploration of the critical role of low and stable inflation as a key determinant of stock market performance."

- Harvey Rosenblum, Senior Vice President and Director of Research, Federal Reserve Bank of Dallas

"Unexpected Returns is at once a penetrating analysis of more than a century of stock market experience and a realistic guide to how we may expect the markets to perform in the years ahead. Easterling's findings and conclusions are grounded on the best economic and financial thinking of our time. This is a book for the serious investor and student of the markets."

- Richard Sylla, Henry Kaufman Professor of the History of Financial Institutions and Markets, Stern School of Business, New York University; co-author of A History of Interest Rates

"The stock market is one of the few places on earth where people become more excited to buy when things are expensive, and more anxious to sell when things are cheap. Ed Easterling has penned a masterful accounting about why this is so wealth-destructive, presented without preconceived notion or bias."

- Bill Mann, Senior Editor, Investing, The Motley Fool

"People are accustomed to the vagaries of market cycles. Far too few realize that these are subsumed within secular bull and bear markets, spanning decades not years. Ed Easterling has done a fine job of describing how these long cycles work and how the investor can plan investment strategies accordingly." Rob Arnott, Chairman, Research Affiliates, LLC; Editor, Financial Analysts Journal

From the Inside Flap


Why is the stock market acting differently in the 2000s than in the 1980s and 1990s?

Before you read any how-to investment books or seek financial advice, read Unexpected Returns, the essential resource for investors and investment professionals who want to understand how and why the financial markets are not the same now as they were in the 1980s and 1990s. In addition to explaining the fundamentals, this book takes you on a graphic journey through the seasons of the market, tying together economics and finance to explain the stock market's cycles. Using comprehensive full-color charts and graphs, it offers an in-depth exploration of what has changed over the past five years - and what you can do about it to avoid disappointment with your investments. This unique combination of investment science and investment art will enable you to differentiate between irrational hope and a rational view of the current financial markets. Based on years of meticulous research, it provides the sensible conclusions that will drive your future investment choices and give you the confidence to rely on your investment outlook, whatever your financial strategy.

More About the Author

Ed Easterling is the author of "Probable Outcomes: Secular Stock Market Insights" and "Unexpected Returns: Understanding Secular Stock Market Cycles." In addition, he is contributing author to "Just One Thing" (John Wiley & Sons) and coauthor of chapters in "Bull's Eye Investing" by John Mauldin (John Wiley & Sons). Mr. Easterling serves as a Senior Fellow and an Advisory Board Member at the Alternative Asset Management Center at SMU's Cox School of Business, and previously served for five years as a member of the adjunct faculty, teaching the course on alternative investments and hedge funds for MBA students. He holds a BBA in business, a BA in psychology, and an MBA from Southern Methodist University. Further, Mr. Easterling is the founder and president of an Oregon-based investment management and research firm that publishes provocative research on the financial markets at www.CrestmontResearch.com. He has over thirty years of alternative investment experience, including financial markets, private equity, and business operations. Crestmont Research is an independent financial market research firm serving individual and institutional investors. Crestmont Research, and founder Ed Easterling, have been featured and quoted in The New York Times, The Wall Street Journal, Financial Times, Business Week, The Economist, and other national and international publications.

Customer Reviews

Whether bull or bear, this book is a must read for all investors.
Rodney T. Madden
He does an excellent job of taking what can be a very complicated subject and breaking it down so a layman can understand.
J. Arp
Ed Easterling's "Unexpected Returns-Understanding Secular Stock Market Cycles" was an unexpected pleasure to read!
James A. Mccraigh

Most Helpful Customer Reviews

121 of 122 people found the following review helpful By Zeke Ashton on April 17, 2005
Format: Hardcover
The stock market's phenomenal rise from 1982-1999 and equally impressive fall beginning in 2000 naturally led many to question the buy-and-hold, "stocks for the long run" conventional investing wisdom of the 1990's. Among the questions: do secular bull and bear markets really exist, and how long do they last? Can we know what causes them? Are they predictable? Can we know which market phase we are experiencing now? If so, what practical benefit does that provide us in forming an investment strategy and making investment decisions?

These are all timely and important questions, and a new book, Unexpected Returns by Ed Easterling, is the most elegantly structured treatment of the subject that I've seen to date, presented with clear historical data to back up the arguments. The surprising thing is how much the average investor experience depends upon stock prices relative to earnings or dividends, and whether these multiples expand or contract during a given investment period. There is a wonderful chart on page 80 of Unexpected Returns that shows just how much investors are dependent upon changes in P/E ratios, not earnings growth, over time for their returns. Easterling shows clearly that the best environment for P/E ratios is when inflation is low and stable and approaches price stability. The further conditions stray from this low-inflation, price stability environment, the greater the downward pressure on P/E ratios. Historically, the highest levels of inflation (such as those experienced in the 1970's) and the most extreme examples of deflation (such as that in the early part of the 20th century in the U.S.) correspond with historically low P/E ratios.
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61 of 67 people found the following review helpful By Kevin Hogan VINE VOICE on July 8, 2005
Format: Hardcover Verified Purchase
I almost stopped reading this book. Easterling spent so much time building credibilty for his work that I nearly fell asleep. THEN when he started talking about the stock market, what factors really determine the long term prices and valuations of markets, well, that's when this book took off. Great stuff.

Written for the non-technical reader but doesn't talk down. I thought the charting of various variables in stock market trends and tendencies to be very friendly to read. Easterling spent the time to literally do the graphs and charts in color and that was a nice change of pace.

He doesn't claim to be a seer, he simply does a brilliant job of laying out piece by piece, how to calculate the future of the stock market.

Truly well done and one of the top four or five investment/stock books of the year.

When you read something this well done, you can only appreciate the author and his love, and depth of knowledge of his subject.

Kevin Hogan, Psy.D.

Author of The Psychology of Persuasion


The Science of Influence
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32 of 34 people found the following review helpful By Mike Shell on March 31, 2005
Format: Hardcover
As an investment manager employing both fundamental and technical analysis, the "Secular Bear Market" seems to me an obvious theme. Major stock market indexes are currently as low as they were in 1998. Six years of a secular bear market and most investors are still using the same strategies that worked in the rising markets of the `90's (buy and hope). This trend is nothing new; stocks have cycled 8 times from upward to sideways, over and over, about every two decades since the 1901. Traditional "buy and hold" relative return strategies rely on the direction of the markets. They enjoy gains when they occur, suffer loses when the market declines, and require a long time horizon that many investors don't have. Skill-based tactical strategies seek gains regardless of market direction using investment manager skill in sector rotation, hedging strategies, and risk management. As Ed says in the book, when the wind is blowing we can let out the sails and enjoy the ride. When the wind stops blowing, you can sit there and wait the wind to come again, or you can get out the oars and start rowing. Based on current technical and fundamental research, it seems the wind may not cast our sails and the oars are now necessary to get where we want to go. This book is truly a remarkable account of the markets history. Very well written and compelling research that all investors must understand.

Mike Shell
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144 of 170 people found the following review helpful By Q on July 30, 2006
Format: Hardcover
The author makes a couple of valuable points. First, any long-term investment strategy has to take into account the existence of recurrent "secular" (i.e., indefinitely long) bear markets. Most leading investment advisors recommend a "buy and hold" strategy, but this only works during predominately bull market periods. Most studies of successful investment strategies are biased towards the recent 1982-1999 bull market, which is anomalous in historical terms. The author uses a plethora of graphs and charts to prove that "buy and hold" doesn't always provide the best returns. Obviously, then, it's better to pull out during the bear markets, but that's easier said than done. The author provides a very complete analysis of the characteristics of bear markets, including P/E ratio, interest and inflation rates, and GDP. The problem is that those characteristics don't always correlate with market performance. For example, this book was written in 2004 and the author predicted a bear market. Well, if you heeded his advice, you would have missed the bull market of 2004, 2005 and early 2006, especially in small-mid caps and foreign stocks. Even with high P/E ratios, a bull market can continue for several years: witness the late 90s. It's virtually impossible to time the market even if you monitor the major stock indexes on a daily basis. There is so much volatility on a daily, weekly, monthly, and yearly basis that's it's impossible to know when the market has switched directions. By the time that it is apparent, it's too late to profit. Even in the midst of great bull markets, there might be week, month, or even year-long downturns. The author says nothing about individual stock picking, beyond a general value approach. The book is all about big picture, long term trends.Read more ›
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