BULL! A History of the Boom, 1982-1999<\/i> by Maggie Mahar<\/p>\n
This was a great book, at least for an investing geek like me. Charlie
\nMunger (2nd in command at Berkshire Hathaway) emphatically recommended
\nthis book back when it came out in 2003. A real in-depth look at the
\ninsanity.<\/p>\n
For instance, consider the position of mutual fund managers in 1998. They
\nare judged by their returns, relative to an index like the S&P 500.
\nThey’re looking at the prices the market is giving companies like Cisco
\nand Amazon and saying to themselves “this doesn’t make sense.” But they
\ncan’t not<\/i> buy them. Because even though the rise of the prices is
\ninsane, if they don’t meet or beat that insane rise, they’ll get canned.
\nIf they buy into sensibly priced stocks, which are few and far between,
\nand they “only” get something like 15% annual return while the Ciscos and
\nAmazons return 100%, they’ll get canned. On the flip side, if they buy
\nthe stocks that everyone else is buying, like Amazon and Cisco, and then
\nthe whole market tanks, especially Amazon and Cisco, they won’t<\/i> get
\ncanned, because the index tanked, and hey, everybody was fooled anyway,
\nright?<\/p>\n
So, the ramp up to the 1998-2001 crash slowly weeded out fund managers who
\nkept their integrity and bought what made sense for their clients instead
\nof their career. The dark side of Natural Selection: the remaining herd
\nwere well adapted for the environment that selected them (the bull
\nmarket), but when that environment changed… extinction of their client’s
\ndollars.<\/p>\n
A very informative read.<\/p>\n","protected":false},"excerpt":{"rendered":"
BULL! A History of the Boom, 1982-1999 by Maggie Mahar This was a great book, at least for an investing geek like me. Charlie Munger (2nd in command at Berkshire Hathaway) emphatically recommended this book back when it came out … Continue reading