- Paperback: 324 pages
- Publisher: CLSA (December 5, 2005)
- Language: English
- ISBN-10: 9628606794
- ISBN-13: 978-9628606795
- Product Dimensions: 6.2 x 0.8 x 9.2 inches
- Shipping Weight: 1 pounds
- Average Customer Review: 28 customer reviews
- Amazon Best Sellers Rank: #2,235,660 in Books (See Top 100 in Books)
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Anatomy of the Bear: Lessons From Wall Street's Four Great Bottoms
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From the Inside Flap
How does one spot the bottom of a bear market? What brings a bear to its end?
There are few more important questions to be answered in modern finance. Financial market history is a guide to understanding the future. Looking at the four occasions when US equities were particularly cheap - 1921, 1932, 1949 and 1982 - Russell Napier sets out to answer these questions by analysing every article in the "Wall Street Journal" from either side of the market bottom.
In the 70,000 articles he examines, one begins to understand the features which indicate that a great buying opportunity is emerging.
By looking at how markets really did work in these bear-market bottoms, rather than theorising how they should work, Napier offers investors a financial field guide to making the best financial provisions for the future.
This new edition includes a brand new preface from the author. --This text refers to an out of print or unavailable edition of this title.
About the Author
Russell Napier is a consultant with CLSA Asia-Pacific Markets writing on issues affecting global equity markets. After studying law, he began his investment career sixteen years ago at Baillie Gifford in Edinburgh managing funds in the Japanese then the US and finally the Asian markets. Moving to Foreign & Colonial Emerging Markets in London he was responsible for managing Asian portfolios. In May 1995, Russell relocated to Hong Kong to become Asian equity strategist for CLSA, a leading Asian equity brokerage. He occupied that position in a full time capacity until 1999 and was ranked number one for Asian strategy in all major industry polls including Institutional Investor from 1997-1999. Since 1999, apart from fulfilling the consultancy role with CLSA, Russell has created and established a new course called A Practical History of Financial Markets (www.sifeco.org), which is taught through the Edinburgh Business School and has been approved by the CFA Institute as part of its Professional Development Program.
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Another thing I learned was the meaning of "Dr. Copper." I had wondered what this meant. In the previous 4 conclusions to a long bear market, a rise in copper prices was the first indicator that economic activity was picking up. Further, author Russell Napier presented the order in which different asset classes rose in price, indicating that the bear was over.
I feel strongly that one has to read books such as this one to understand in general how markets behave. The mainstream financial media sends all kinds of signals in comparison. One day headlines say the S&P500 is up on news of a European meeting to discuss a bailout. The next day headlines say the S&P500 is down on news of such a meeting. Napier used research methods to consider the totality of mainstream news stories, not just some in isolation.
Certainly, we have been in a long-term bear market. Everybody wants to know when it ends, but if this bear is similar to the four bears Napier outlined, it probably has some more years to run its course.
Napier gives a historic review of the great US bear market bottoms and what we can learn from them. I don't imagine timing the market at the bottom, but I think the book gave me tools to recognise conditions in witch I can be more offensive in my investing. What really baffled me was that is not always speculation that goes to boom and then a bust that gives you the undervaluation of equities.
Mind that Napier aint talking about "small bears". He is talking about the great bears of 1921, 1932, 1949 and 1982. And according to this theory 2001 might have been a start on another great bear.
This one is specific to the four big Bear markets of the last century. The author goes through each one as an example. He identifies each stage and has clippings from the markets on peoples sentiment. Shows pricings and looks for what was the best indicator at the bottom. There is no hype, predictions, or false systems in this book. It's more presenting information and presenting patterns that occured.
All the bears follow similar patterns where there is froth, leverage, money sloshing around and everything is priced up a bit. Then some triggering event happens and people either re-evaluate or are forced to change their minds on valuations. Prices drop until they hit a bottom. Things uptrend for a while even though the news is still bad.... The author goes over each bear and how it's the same and how it's different.
Until reading this book, I did not understand or even think about using commodity prices as a leading indicator. Did not know that the stock market turned up before the economy did. Did not know that the great depression involved multiple stages, an international banking crisis, and a late move to gold.
After reading this book, now when I see someone on the TV saying that "They've never seen anything like this before" about LTCM, Bear Strerns, or the price of oil or gold... I have a better perspective. When someone tells me that "the market has definately found bottom" or "Can't go down from here"... I kind of chuckle now.
I do know that when people say "This is a great time to buy stocks..." they often don't know what they're talking about, or they're making it up.
If the credit crisis worsens this year, this summer or the next may be the best buying opportunity in the US stock market in the last 30 years. Hopefully what I've read will be some help. Every downturn is different, and Banks/Fed/Investors act differently each time based on past exp and history... It may be that we've already hit bottom... It may be that nothing in this book will call the next bottom... Only time will tell.
Many won't read this book because it doesn't say "Get RICH QUICK" on the front... LOL