Investment and securities Books

Book SynopsisThe Economics of Financial Markets presents a concise overview of capital markets, suitable for advanced undergraduates and for beginning graduate students in financial economics. Following a brief overview of financial markets - their microstructure and the randomness of stock market prices - this textbook explores how the economics of uncertainty can be applied to financial decision-making. The mean-variance model of portfolio selection is discussed, with analysis extended to the capital asset pricing model (CAPM). Arbitrage plays a pivotal role in finance and is studied in a variety of contexts, including the APT model of asset prices. Methods for the empirical evaluation of CAPM and APT are also discussed, together with the volatility of asset prices, the intertemporal CAPM and the equity premium puzzle. An analysis of bond contracts leads into an assessment of theories of the term structure of interest rates. Finally, financial derivatives are explored, focusing on futures and optTrade Review'This is a very well-written and thorough presentation of the key topics in financial economics - the book deserves to be widely adopted in support of courses in this dynamic area of teaching and research.' Peter Smith, University of York'Roy Bailey has written a highly readable and comprehensive introduction to financial markets. He takes the reader carefully through relevant theories before describing how they relate to different financial markets. Students will benefit from Roy Bailey's rigorous but approachable style of writing.' Colin Mayer, Peter Moores Professor of Finance, Saïd Business School, University of Oxford'Roy Bailey takes the rigourous economists approach and provides a detailed treatment of the underlying theoretical concepts. … provides complete coverage of the important concepts involved.' The Times Higher Education SupplementTable of ContentsPreface; 1. Asset markets and asset prices; 2. Asset market microstructure; 3. Predictability of prices and market efficiency; 4. Decision making under uncertainty; 5. Portfolio selection: the mean-variance model; 6. The capital asset pricing model, CAPM; 7. Arbitrage; 8. Factor models and arbitrage pricing theory, APT; 9. Empirical appraisal of the CAPM; 10. Present value relationships and price variability; 11. Intertemporal choice and equity premium puzzle; 12. Bond markets and fixed-interest securities; 13. Term structure and interest rates; 14. Futures markets - fundamentals; 15. Futures markets - speculation and hedging; 16. Futures markets - applications; 17. Swap contracts and swap markets; 18. Options markets: fundamentals; 19. Options markets - price determination; 20. Options markets - applications.

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Book SynopsisKate Kelly, acclaimed journalist and author of Street Fighters, investigates the world of commodities tradersWhen most of us think of the drama of global finance, we think of stocks and bonds. But commodities? Crude oil and soya beans? Copper and wheat? What could be more boring?That''s exactly what the elite commodity traders want us to think. They don''t seek the spotlight. They don''t want to be as famous as Warren Buffett. Their astonishing wealth was created in obscurity, because they dwell in private companies or deep within large banks and corporations.But if the individuals in the commodities boom have gone unnoticed, their impact has not. Prices of raw materials have exploded. Are the big traders jacking up the cost of petrol, food, and essentials bought by people around the world? How did such immense power end up in the hands of a few?In this riveting book, Kate Kelly takes us inside the inner circle that affects so many thingTrade ReviewGripping ... even more shocking than you think ... Kelly is a master of storytelling * Independent on Sunday *Engaging * Financial Times *Outsiders know surprisingly little about this world, and Kate Kelly ... has done a good job of shedding light on some of the personalities who dominate it * The Economist *

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Book Synopsis**Winner of thePersonal Finance and Investment Book of the Year at theAustralian Business Book Awards 2022**Conquer the challenges faced as a woman pursuing financial independence and prosperity In The Female Investor: Creating Wealth, Security, and Freedom through Property, celebrated property and finance experts Nicola McDougall and Kate Hill deliver a practical and approachable guide for women of all ages as they navigate the world of property investing. You''ll learn how to build equity and wealth in the property market and achieve financial independence, all while overcoming the gender-based salary deficit and balancing the demands of family and work. You'll discover invaluable advice on: How to get started with property investing, regardless of what stage of life you''re in How to protect your assets in the event of a relationship breakdown and handle the talk with your partner when you decide i

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Book SynopsisMany traders go around searching for that one perfect trading strategy that works all the time in the global FOREX (foreign exchange/currency) market. Frequently, they will complain that a strategy doesn''t work. Few people understand that successful trading of the FOREX market entails the application of the right strategy for the right market condition.7 Winning Strategies For Trading Forex covers:- Why people should be paying attention to the FOREX market, which is the world''s largest and most liquid financial market- How understanding the structure of this market can be beneficial to the independent trader- How to overcome the odds and become a successful trader- How you can select high-probability trades with good entries and exits.Grace Cheng highlights seven trading strategies, each of which is to be applied in a unique way and is designed for differing market conditions. She shows how traders can use the various market conditions to their advantage by tailoring the strategy to suit each one.This revealing book also sheds light on how the FOREX market works, how you can incorporate sentiment analysis into your trading, and how trading in the direction of institutional activity can give you a competitive edge in the trading arena.This invaluable book is ideal for new and current traders wanting to improve their trading performance.Filled with practical advice, this book is a must-read for traders who want to know exactly how they can make money in the FOREX market.

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Book SynopsisHelps you to build a balanced share portfolio that provides dividend income, whether you're just starting out or ready to retire. This title includes real-life examples and offers an analysis.

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Book SynopsisWhat determines currency trends and who are the players in the foreign exchange arena? Does FX drive other financial markets, or is it the passive end-product of all the other markets? FX is without clear supply and demand factors, so how do traders determine sentiment and price direction? This title deals with these questions.Table of ContentsAbout the Authors Foreword by Michael J. Woolfolk Introduction 1. The Matrix Concept 2. Review of Risks 3. Global Attitude Toward Risk 4. Interest Rates and Interest Rate Differentials 5. Forecasting FX 6. Positions and Flows 7. Intermarket Analysis 8. Technical Analysis in Foreign Exchange 9. The FX Files of Trading 10. Be Careful What You Wish For: Reserve Diversification and the Future of the Dollar 11. The Euro and the New Gold Standard 12. The Central Bank Tool Kit and How it Affects Foreign Exchange References Index

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Book SynopsisShort-term interest rate futures (STIR futures) are one of the largest and most liquid financial markets in the world. This book includes: details on the effects of the financial crisis on STIR futures pricing and trading; an analysis of relative value trades against bond and swap derivatives; and trading synthetic FX swaps using STIR futures.

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Book SynopsisThe classic work on Elliott Wave and market cycles returned to printDuring the 1930s, R. N. Elliott undertook the painstaking procedure of attempting to classify share price movements for the preceding 80 years on Wall Street. It was during the course of this seminal work that Elliott discovered a definable basic rhythm in share price movements which he felt had forecasting value when correctly applied.In 1938 Elliott published his findings in a series of articles with the overall title The Wave Principle. After publication, Elliott''s work drifted into obscurity, until Robert Beckman''s ''Supertiming'' introduced it to a new audience.In this renowned work, Beckman sets out with three main objectives:1. To clarify obscurities and grey areas of The Wave Principle that were present in Elliott''s original writing.2. To incorporate the work of other analysts in order to allow the Wave Principle to have a broader application.3. To show the correct conceptual approach that should be used with the Wave Principle so that one can apply it with confidence and consistency.If you are willing to approach the subject of stock market behaviour with an open mind, who have faith in the fundamental laws of economics and the consistency of human nature, and who would like to avoid the pitfalls that have deluded the investment community for decades, this is the book for you.

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Book SynopsisThe Defensive Value Investor presents a simple and comprehensive strategy for building and managing a share portfolio.

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Book SynopsisAn analysis of the investment approach of the world''s top investors, showing how to achieve market-beating returnsIt is possible to beat the market. Taking this as a starting point, Excess Returns sets out to explore how exactly the most famous investors in the world have done it, year after year, sometimes by huge margins.Excess Returns is not a superficial survey of what investors have said about what they do. Rather, Frederik Vanhaverbeke applies a forensic analysis to hundreds of books, articles, letters and speeches made by dozens of top investors over the last century and synthesises his findings into a definitive blueprint of how exactly these investment legends have gone about their work.Among the legends whose work has been studied are Warren Buffett, Benjamin Graham, Anthony Bolton, Peter Lynch, Charles Munger, Joel Greenblatt, Seth Klarman, David Einhorn, Daniel Loeb, Lou Simpson, Prem Watsa and many more.Among the revealing insights, you will learn of the striking similarities in the craft of great investors, crucial subtleties in their methods that are ignored by many, and the unconscious errors investors commonly make and how these are counter to successful investing. Special attention is given to two often overlooked areas: effective investment philosophy and investment intelligence.The investing essentials covered include:- Finding bargain shares- Making a quantitative and qualitative business analysis- Valuation methods- Investing throughout the business cycle- Timing buy and sell decisions- And much, much more!Excess Returns is full of timeless and practical insights, presented in a unique style, to help investors focus on the most promising opportunities and lead the way to beating the market.

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Book SynopsisThis book concentrates on the investment style of Business Perspective Investing, as practiced by Benjamin Graham and Warren Buffett. It takes the reader through the realisation that the thought process involved when buying shares in a company is no different to buying the company in its entirety.Beginning with how to assess the quality of a business, it explains and illustrates with examples what to look for in company accounts, how to determine the value drivers of a business, the strength of its franchise and how to interpret key financial ratios and performance indicators. It discusses the ideal characteristics of a business worthy of investment so that you will develop a mental checklist of what to look out for.The book then sets out a number of valuation methods to determine the likely economic worth of a company. It is against this estimate that a judgement can be made as to whether a share price offers good value.The book concludes with thoughts on portfolio construction, in particular Focus Investing, where a concentrated approach is taken, and legitimate reasons for deciding to sell a holding. Throughout, the emphasis is on the methodology used to manage the SDL UK Buffettology Fund.

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Book SynopsisSmart Portfolios is about building and maintaining smart investment portfolios. At its heart are the three key questions every investor needs to answer:1. What to invest in.2. How much to invest.3. When to make changes to a portfolio.Author Robert Carver addresses these three areas by providing a single integrated approach to portfolio management. He shows how to follow a step-by-step process to build a multi-asset investment portfolio, and how to rebalance the portfolio efficiently. He covers both investment in collective funds like ETFs, and also direct investment in individual equities.Important features include:-- Why forecasting future returns is so difficult, and how to account for uncertainty when making investment decisions.-- How to accurately calculate the true costs of an investment, including costs that you may not even be aware of.-- How to select the best ETF for each asset class.-- How to compare the costs and other features of different ETFs.-- How to select individual shares.-- Calculating the number of shares needed for adequate diversification.-- How to use systematic forecasting algorithms to adjust portfolio allocations.-- How to cut trading costs through smart rebalancing strategies and execution tactics.Robert Carver also explains how to blend assets with different levels of risk, and how to construct portfolios that suit the level of risk that the investor can cope with.Smart Portfolios is detailed, comprehensive, and full of practical methods, rules of thumb and techniques, all fully explained with examples. It is intended for professional investors worldwide, including financial advisors, private bankers, wealth managers and institutional funds; as well as experienced private investors.Trade Review"Two years after the excellent Systematic Trading, Rob has done it again. Smart Portfolios offer a unique insight into how a finance professional approaches portfolio construction and investment. This books clears up many misconceptions about investing and offers rational methods and tools for taking care of your hard earned money." -- Andreas Clenow, CIO Acies Asset Management, Zurich. "Smart Portfolios introduces plenty of concepts that anyone should follow in thinking about how to structure their investment dollars... Smart Portfolios makes for a valuable read, because it always brings you back to the practical macro-level questions (what to invest in, how much to invest, what changes to make) instead of going so far down the rabbit hole that you forget why various formulas or charts are relevant. Carver's pedigree and current status make him the right kind of author for this type of book." -- Adam Just, Proud Money. "In Finance (like many other subjects) there is a large amount of research that is smart but impractical and an equally large amount of popular literature that is practical but dumb. This book is in that rare category of smart and practical - it is also an entertaining read in its own right." -- Francis Breedon, Professor of Finance Queen Mary, University of London and former head of currency strategy at a major investment bank. "Smart Portfolios is a sophisticated but not overly technical treatment of a topic that every investor has to come to grips with. As such, it is a recommended read." --Brenda Jubin, Investing.co. "This is one of those reference books that you put on the shelf - one of those great; just the facts; very practical reference guides that you can't go wrong with... The book is a solid piece of work so check it out... You can really open up to any page and get the juices flowing in terms of what's a good thought process... It's about the process and there are some really practical ways, mathematical ways, to put a good process in motion for your life... A great Christmas present!" --Michael Covel, Trend FollowingTable of ContentsIntroduction 1. What is the best portfolio? 2. The unpredictability of returns 3. Costs 4. Reconciling unpredictable returns and predictable costs

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Book SynopsisREVISED AND UPDATED 3RD EDITION OF THE NO. 1 BOOK ABOUT THE STOCK MARKETFor the past ten years, Shares Made Simple has been the top choice of readers who want to know more about the stock market. Now in a fully revised and updated third edition, the book continues to tear away the mystique and jargon that surrounds the stock market.Written by highly respected financial journalist Rodney Hobson, it takes you step by step through the most basic concepts of stock market investing, carefully explaining issues such as:- what shares are and how they are bought and sold- why share prices go up and down- why some companies'' shares look cheap while others appear to be expensive- the hidden traps for the unwary.This fully revised and updated third edition of this bestselling book sets out to create a level playing field between the stock market professionals and the small investor. No one needs to suffer pitiful bank interest rates when there is real money to be made in sharing the nation''s wealth.Tens of thousands of investors have already benefited from Rodney''s clear explanation of the stock market - now you can too.Table of ContentsPart One: Shares 1. What Are Shares? 2. How Shares Are Created 3. Whose Company is It? 4. What's in it for Me? 5. Is My Investment Safe? Part Two: The Stock Market 6. The Marketplace 7. Full Listings and AIM 8. How Shares are Traded 9. Stock Market Indices Part Three: Companies 10. Company Focus 11. Income Statement (Profit and Loss) 12. Balance Sheet 13. Potential Nasties Part Four: Investing 14. Starting Out 15. Stockbrokers 16. Fundamental Data 17. Charting 18. Tips 19. Jargon Busting 20. Rights Issues and Placings Part Five: Takeovers 21. Mergers and Acquisitions 22. Before a Bid 23. A Bid is Launched 25. Management Buyouts Useful Websites

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Book SynopsisCompletely revised and updated second edition, with new AmiBroker codes and new complete portfolio tests.

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Book SynopsisAlternative investments are the allocator's edge for the portfolios of tomorrow and this is the essential guide for advisors and investors looking to seize the opportunity. Written by Phil Huber with a foreword by Clifford Asness.

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Book SynopsisFULLY REVISED AND UPDATED THIRD EDITION Investing expert Andy Bell shows you how to plan your financial future in this updated edition of his bestselling guide to do-it-yourself investing. Andy shows you how to build a long-term investment portfolio using a range of low-cost, tax-efficient strategies. He provides expert guidance and industry insights suitable for first-time investors and those who are more experienced. The DIY Investor teaches you the skills and strategies you need to take control of your investments and manage your money in the years ahead.

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Book SynopsisThe UK's leading millennial money expert, Iona Bain, is on a mission to help young people own their futures, once and for all.

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Book SynopsisThis book tells the dramatic untold story behind Neil Woodford's stunning rise and fall, and reveals why his multi-billion-pound investment empire really collapsed in such an abrupt and catastrophic manner.

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Book SynopsisBusiness Angel Investing is your comprehensive guide on how to invest, what to invest in, how to manage your investments and how to make money.

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Book SynopsisBen Carlson and Robin Powell show you how to put yourself on the path to financial freedom through sensible saving and straightforward investing.

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Book SynopsisMax Gunther's classic study of the super rich - now back in a new edition.The Very, Very Rich and How They Got That Way provides revealing insights into the intriguing world of big money, recounting the spectacular success stories of 15 people who made it to the very, very top.In 1972, Max Gunther invited readers to take a journey with him through a gallery of America''s most prominent millionaires. The inhabitants framed here are by no means merely ordinary millionaires, though - the minimum qualifying standard to be considered for inclusion was ownership of assets valued at $100 million or more (the equivalent of $650 million today).This classic is now nearly 50 years old but its value endures, since the key steps on the route to wealth do not change with time. These secrets can be learned from, adapted and applied by anyone today.

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Book SynopsisHistorian and professional investor Alasdair Nairn predicted both the dotcom and subprime collapses, and in this compelling new book shares the evidence that we are living through such a period of deadly excess right now.

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Book SynopsisFrom the last decades of the seventeenth century until the beginning of the twentieth, the tontine, in one form or another, was a ubiquitous financial instrument. As a revenue-raising tool of governments it supported the cost of war, and as a private capital-raising instrument it provided funding for civic improvement and urban development projects.While the tontine is known today mainly through fictional works (Robert Louis Stevenson, Agatha Christie, and The Simpsons among others), this book tells the history of how it evolved from a public revenue-raising scheme into a popular private investment and infrastructure financing tool, before it was displaced by cheaper forms of borrowing. Focusing on the early development of the tontine, and with European and North American case studies, the narrative brings to life the story of a little-understood financial innovation.This concise and engaging book is an ideal introduction to the history of the tontine for all readers i

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Book SynopsisYoung people face unprecedented financial challenges: rising student debt, stiff competition for jobs, barriers to home ownership, dwindling state benefits and prospects of a longer working life. Essential Personal Finance is a guide to all the key areas of personal finance: budgeting, managing debt, savings and investments, insurance, securing a home and laying the foundations for retirement.It provides an introduction to some of the essential foundations of a modern undergraduate finance qualification, including: â the nature of financial institutions, markets and economic policy that shape the opportunities and decisions individuals faceâ the range of financial assets available to households, risk-return trade-off, basics of portfolio construction and impact of taxâ the importance of the efficient market hypothesis and modern portfolio theory in shaping investment strategies and the limitations of these approachesâ behavioural finance as a key t

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Book SynopsisThis hands-on guide teaches you how to develop a deep learning trading model from scratch using Python, and it also helps you create, trade, and back-test trading algorithms based on machine learning and reinforcement learning.

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Book SynopsisWhy do stock and housing markets sometimes experience amazing booms followed by massive busts and why is this happening more and more frequently? In order to answer these questions, William Quinn and John D. Turner take us on a riveting ride through the history of financial bubbles, visiting, among other places, Paris and London in 1720, Latin America in the 1820s, Melbourne in the 1880s, New York in the 1920s, Tokyo in the 1980s, Silicon Valley in the 1990s and Shanghai in the 2000s. As they do so, they help us understand why bubbles happen, and why some have catastrophic economic, social and political consequences whilst others have actually benefited society. They reveal that bubbles start when investors and speculators react to new technology or political initiatives, showing that our ability to predict future bubbles will ultimately come down to being able to predict these sparks.Trade Review'Where do financial bubbles come from? Can – and should – policy makers always try to stop them? Can investors avoid them? Quinn and Turner take us on an informative, engaging tour of the last three hundred years of bubbles and, using history as their guide, provide intriguing answers.' Richard S. Grossman, author of WRONG: Nine Economic Policy Disasters and What We Can Learn from Them.'Quinn and Turner argue that the essential elements of capital markets: money, credit and speculation are also the necessary ingredients of financial bubbles. Can we have one without the other?' William Goetzmann, author of Money Changes Everything: How Finance Made Civilization Possible'Quinn and Turner have made a major contribution to the literature on financial speculation and the bubbles to which they contribute. Not only do they provide an analytical dissection of ten salient episodes over some 300 years, they embed these narratives in an explanatory framework – the 'bubble triangle' – that links the relative marketability of financial assets and the supply of credit to speculative excess. Thus, Boom and Bust shows how to mine history for meaning, with lessons relevant today for investors and policy-makers alike.' Bill Janeway, author of Doing Capitalism in the Innovation Economy: Reconfiguring the Three-Player Game between Markets, Speculators and the State'For anyone interested in financial history, Boom and Bust is essential reading.' John Plender, Financial Times'An action-packed romp through ten of the biggest bubbles and busts of the past three centuries … Some (most) finance books are arid and hard-going; this one I couldn't put down.' Alistair Haimes, The Critic'A lovely book. It describes and draws lessons from ten financial manias, from the South Sea Bubble to 'Casino Capitalism with Chinese Characteristics'. It also explains bubbles with what the authors call 'the bubble triangle'. Its three sides consists of oxygen, which is the 'marketability' of assets, fuel, which is 'money and credit' and heat, which is 'speculation'. This combination recurs repeatedly and so do bubbles. Just like fires, financial manias and crashes are destructive, but they can also be useful, by clearing out dead wood.' Martin Wolf, Financial Times, Best Books of 2020'A readable and impressively researched title to be enjoyed by the generalist or specialist.' Niall McGarrigle, Irish Times'Written with exquisite concision and packing a wealth of detail and citation into each chapter, Boom and Bust is an instant classic.' Rebecca L. Spang, Times Literary Supplement'This wonderful book is interesting, informative, and insightful … Highly recommended.' R. M. Whaples, ChoiceTable of ContentsList of figures; List of tables; 1. The bubble triangle; 2. 1720 and the invention of the bubble; 3. Marketability revived: the first emerging market bubble; 4. Democratising speculation: the great railway mania; 5. Other people's money: the Australian land boom; 6. Wheeler-dealers: the British bicycle mania; 7. The roaring twenties and the Wall Street Crash; 8. Blowing bubbles for political purposes: Japan in the 1980s; 9. The dot-com bubble; 10. 'No more boom and bust': the subprime bubble; 11. Casino capitalism with Chinese characteristics; 12. Predicting bubbles; Acknowledgements; Endnotes; Bibliography; Index.

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Book SynopsisProvides important insights on trading ranges, breakouts, order management, and the mathematics of trading. This book addresses how to spot and profit from trading ranges which most markets are in, most of the time using the technical analysis of price action.Table of ContentsAcknowledgments xi List of Terms Used in This Book xiii Introduction 1 PART I Breakouts: Transitioning into a New Trend 35 CHAPTER 1 Example of How to Trade a Breakout 53 CHAPTER 2 Signs of Strength in a Breakout 61 CHAPTER 3 Initial Breakout 81 CHAPTER 4 Breakout Entries in Existing Strong Trends 91 CHAPTER 5 Failed Breakouts, Breakout Pullbacks, and Breakout Tests 99 CHAPTER 6 Gaps 119 PART II Magnets: Support and Resistance 139 CHAPTER 7 Measured Moves Based on the Size of the First Leg (the Spike) 153 CHAPTER 8 Measured Moves Based on Gaps and Trading Ranges 165 CHAPTER 9 Reversals Often End at Signal Bars from Prior Failed Reversals 175 CHAPTER 10 Other Magnets 179 PART III Pullbacks: Trends Converting to Trading Ranges 183 CHAPTER 11 First Pullback Sequence: Bar, Minor Trend Line, Moving Average, Moving Average Gap, Major Trend Line 205 CHAPTER 12 Double Top Bear Flags and Double Bottom Bull Flags 213 CHAPTER 13 Twenty Gap Bars 233 CHAPTER 14 First Moving Average Gap Bars 239 CHAPTER 15 Key Inflection Times of the Day That Set Up Breakouts and Reversals 245 CHAPTER 16 Counting the Legs of Trends and Trading Ranges 253 CHAPTER 17 Bar Counting: High and Low 1, 2, 3, and 4 Patterns and ABC Corrections 259 CHAPTER 18 Wedge and Other Three-Push Pullbacks 301 CHAPTER 19 Dueling Lines: Wedge Pullback to the Trend Line 313 CHAPTER 20 “Reversal” Patterns: Double Tops and Bottoms and Head and Shoulders Tops and Bottoms 319 PART IV Trading Ranges 327 CHAPTER 21 Example of How to Trade a Trading Range 367 CHAPTER 22 Tight Trading Ranges 377 CHAPTER 23 Triangles 411 PART V Orders and Trade Management 417 CHAPTER 24 Scalping, Swinging, Trading, and Investing 419 CHAPTER 25 Mathematics of Trading: Should I Take This Trade? Will I Make Money If I Take This Trade? 437 CHAPTER 26 Need Two Reasons to Take a Trade 481 CHAPTER 27 Entering on Stops 491 CHAPTER 28 Entering on Limits 493 CHAPTER 29 Protective and Trailing Stops 517 CHAPTER 30 Profit Taking and Profit Targets 535 CHAPTER 31 Scaling Into and Out of a Trade 543 CHAPTER 32 Getting Trapped In or Out of a Trade 567 About the Author 571 About the Website 573 Index 575

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Book SynopsisThis is the second edition of the bestselling book that predicted the market crash. For more than a decade, Peter Schiff has been observing the US economy and believes that the nation faces an economic storm because of increasing federal, personal and corporate debt.Table of ContentsAuthor's Note, Crash Proof 2.0 vii Preface xv Introduction: America.com: The Delusion of Real Wealth xxi 1 The Slippery Slope: Consumers, Not Producers 1 2 What Uncle Sam, the Mass Media, and Wall Street Don't Want You to Know 33 3 For a Few Dollars More: Our Declining Currency 63 4 Inflation Nation: The Federal Reserve Fallacy 91 5 My Kingdom for a Buyer: Stock Market Chaos 129 6 They Burst Bubbles, Don't They?: The Coming Real Estate Debacle 159 7 Come On In, the Water's Fine: Our Consumer Debt Problem 199 8 How to Survive and Thrive, Step 1: Rethinking Your Stock Portfolio 237 9 How to Survive and Thrive, Step 2: Gold Rush—Be the First Person on Your Block to Stake a Claim 283 10 How to Survive and Thrive, Step 3: Stay Liquid 317 Epilogue 339 Books for Further Reading 345 Glossary 349 Index 353

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Book SynopsisBecome a savvy trader with a mindful edge... TraderMind is an essential resource for understanding and applying mindfulness-based approaches that help to enhance an individual trader''s overall performance. Based upon extensive research and practical application in the real world of the trading floor, TraderMind includes methods, tactics and techniques to build and enhance awareness and insight, which help manage thoughts and emotions and maximize trading performance. The author demonstrates how to overcome habitual or impulsive trading behaviours, manage energy levels, become more attuned to and responsive to the market, more situationally aware and build patterns of effective trading behaviour. By developing these skills and good behaviours, traders can overcome inherent biases and, ultimately, improve their trading decisions. The techniques outlined in TraderMind can be utilized as core competencies of trading psychology or can be used to coTable of ContentsAbout the Author ix Foreword by Linda Raschke xi Acknowledgements xiii Introduction: The Evolution of TraderMind xv 1 What is Mindfulness? 1 2 Developing Your Mindfulness Muscle 23 3 The Attention and Awareness Advantage 43 4 Thinking About Thinking 59 5 Embracing Emotions 83 6 Managing Urges and Impulses 105 7 Trading With the Body in Mind 119 8 Habits, Behaviour, Action 141 9 Turning Towards Difficulty 161 10 The Mindful Trader and Investor 185 TraderMind: Mindfulness‐Based Trading and Investing Training Programme 191 References 199 Index 209

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Book SynopsisComprehensive coverage of the four major trading styles Evolution of a Trader explores the four trading styles that people use when learning to trade or invest in the stock market. Often, beginners enter the stock market by: Buying and holding onto a stock (value investing). That works well until the trend ends or a bear market begins. Then they try Position trading. This is the same as buy-and-hold, except the technique sells positions before a significant trend change occurs. Swing trading follows when traders increase their frequency of trading, trying to catch the short-term up and down swings. Finally, people try Day trading by completing their trades in a single day. This series provides comprehensive coverage of the four trading styles by offering numerous tips, sharing discoveries, and discussing specific trading setups to help you become a successful trader or investor as you journey through each style. Trade Review“The three books in this series were written for people unfamiliar with the inner workings of the stock market, but will still curl the toes of professionals, too. Research is used to prove the ideas discussed, but is presented in an easy to understand and light-hearted manner. You will find the books to be as entertaining as they are informative and packed with moneymaking tips and ideas. Use the ideas presented here to hone your trading style and improve your success. Whether you are a novice who has never purchased a stock but wants to, or a professional money manager who trades daily, these books are a necessary addition to any market enthusiast’s bookshelf.” —Alan Battista, Stockineer.com Book ReviewTable of ContentsPreface ix Acknowledgments xv Chapter 1 how to retire at 36 1 Chapter Checklist 4 Chapter 2 Money Management 7 Trading: How Much Money, Honey? 8 Order Types: Read the Fine Print! 10 Position Sizing: My Story 12 Position Sizing by Market Condition: Bull or Bear? 13 How Many Stocks to Hold? 15 A Better Way? Portfolio Composition 16 Hold Time: How Long is Long Enough? 18 Hold Time: My Trades 19 The Money Management Matrix 19 Should You Scale into Positions? 21 Averaging Down: Throwing Away Money or Smart Choice? 28 Scaling Out of Positions: A Profi table Mistake? 31 Dollar‐Cost‐Averaging: Good or Bad? 34 Using Leverage: An Expensive Lesson! 35 Leverage Guidelines Checklist 36 Chapter Checklist 37 Chapter 3 Do Stops Work? 41 What is Hold Time Loss? 42 Mental Stop: For Professionals Only! 44 Minor High or Low Stop: A Good Choice 45 Squaring Off Round Numbers 46 Chart Pattern Stop: Too Costly? 47 Stopped by a Moving Average 47 The Truth about Trendlines 48 Trendline Stop 49 Fibonacci Retrace Stop: Deal or Dud? 50 Fixed Percentage Trailing Stop 53 Volatility Stop 53 Chandelier Stop Leaves You Hanging 55 Testing Six Stop Types 55 What I Use 59 Chapter Checklist 61 Chapter 4 Support and Resistance 63 Types of Support and Resistance 64 Measured Move Support and Resistance 65 Minor High Resistance 66 Volume at Minor High Resistance 67 Minor Low Support 67 Volume at Minor Low Support 68 Minor High Support 68 Minor Low Resistance 69 Gaps Showing Support and Resistance 70 Myth: Tall Candle Support and Resistance 70 Horizontal Consolidation Regions 71 Another Look at Round Numbers 72 Support in Straight‐Line Runs 72 Resistance in Straight‐Line Runs 74 SAR Summary 75 Chapter Checklist 76 Chapter 5 45 Tips Every Trader Should Know 79 Determining Stock or Market Direction 97 Finding the Market Bottom 102 Visual Tips 122 Chapter Checklist 130 Chapter 6 Finding and Fixing What is Wrong 135 What Was the Market Behavior? 136 Was the Industry Trending? 137 How is the Timing? 139 Are All Entry Conditions Met? 142 Was the Position Size Proper? 144 Was an Initial Stop Used? 144 Did You Exit Before the Stop? 145 What Was the Risk/Reward Ratio? 146 Did You Average Up? 147 Did You Average Down? 147 Are You Buying Out of Season? 148 Trading Checklist 149 Chapter Checklist 151 Chapter 7 What We Learned 153 Chapter 1: How to Retire at 36 153 Chapter 2: Money Management 153 Chapter 3: Do Stops Work? 155 Chapter 4: Support and Resistance 156 Chapter 5: 45 Tips Every Trader Should Know 157 Chapter 6: Finding and Fixing| What is Wrong 161 Visual Appendix of Chart Patterns 163 Bibliography 169 Other Sites of Interest 171 About the Author 173 Index 175

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Book SynopsisFor Amazon customers: The new version of the book, printed on higher quality paper, is now available to purchase. The essential futures market reference guide A Complete Guide to the Futures Market is the comprehensive resource for futures traders and analysts.Table of ContentsAbout the Authors xv Part I Preliminaries Chapter 1 For Beginners Only 3 Purpose of This Chapter 3 The Nature of Futures Markets 3 Delivery 4 Contract Specifications 5 Volume and Open Interest 9 Hedging 11 Trading 15 Types of Orders 16 Commissions and Margins 19 Tax Considerations 19 Chapter 2 The Great Fundamental versus Technical Analysis Debate 21 Part II Chart Analysis and Technical Indicators Chapter 3 Charts: Forecasting Tool or Folklore? 27 Chapter 4 Types of Charts 35 Bar Charts 35 Linked Contract Series: Nearest Futures versus Continuous Futures 39 Close-Only (“Line”) Charts 40 Point-and-Figure Charts 42 Candlestick Charts 43 Chapter 5 Linking Contracts for Long-Term Chart Analysis: Nearest versus Continuous Futures 45 The Necessity of Linked-Contract Charts 45 Methods of Creating Linked-Contract Charts 46 Nearest versus Continuous Futures in Chart Analysis 48 Conclusion 51 Chapter 6 Trends 57 Defining Trends by Highs and Lows 57 TD Lines 66 Internal Trend Lines 73 Moving Averages 78 Chapter 7 Trading Ranges 83 Trading Ranges: Trading Considerations 83 Trading Range Breakouts 86 Chapter 8 Support and Resistance 91 Nearest Futures or Continuous Futures? 91 Trading Ranges 92 Prior Major Highs and Lows 94 Concentrations of Relative Highs and Relative Lows 101 Trend Lines, Channels, and Internal Trend Lines 106 Price Envelope Bands 107 Chapter 9 Chart Patterns 109 One-Day Patterns 109 Continuation Patterns 122 Top and Bottom Formations 134 Chapter 10 Is Chart Analysis Still Valid? 149 Chapter 11 Technical Indicators 155 What Is an Indicator? 155 The Basic Indicator Calculations 157 Comparing Indicators 157 Moving Average Types 165 Oscillators and Trading Signals 167 Indicator Myths 170 Indicator “Types” 172 Conclusion 173 Part III Applying Chart Analysis to Trading Chapter 12 Midtrend Entry and Pyramiding 177 Chapter 13 Choosing Stop-Loss Points 183 Chapter 14 Setting Objectives and Other Position Exit Criteria 189 Chart-Based Objectives 189 Measured Move 190 Rule of Seven 194 Support and Resistance Levels 196 Overbought/Oversold Indicators 198 DeMark Sequential 199 Contrary Opinion 203 Trailing Stops 204 Change of Market Opinion 204 Chapter 15 The Most Important Rule in Chart Analysis 205 Failed Signals 205 Bull and Bear Traps 205 False Trend Line Breakouts 211 Return to Spike Extremes 213 Return to Wide-Ranging Day Extremes 216 Counter-to-Anticipated Breakout of Flag or Pennant 219 Opposite Direction Breakout of Flag or Pennant Following a Normal Breakout 222 Penetration of Top and Bottom Formations 225 Breaking of Curvature 229 The Future Reliability of Failed Signals 229 Conclusion 231 Part IV Trading Systems and Performance Measurement Chapter 16 Technical Trading Systems: Structure and Design 235 The Benefits of a Mechanical Trading System 236 Three Basic Types of Systems 236 Trend-Following Systems 237 Ten Common Problems with Standard Trend-Following Systems 244 Possible Modifications for Basic Trend-Following Systems 247 Countertrend Systems 254 Diversification 256 Ten Common Problems with Trend-Following Systems Revisited 259 Chapter 17 Examples of Original Trading Systems 261 Wide-Ranging-Day System 261 Run-Day Breakout System 268 Run-Day Consecutive Count System 273 Conclusion 278 Chapter 18 Selecting the Best Futures Price Series for System Testing 279 Actual Contract Series 279 Nearest Futures 280 Constant-Forward (“Perpetual”) Series 281 Continuous (Spread-Adjusted) Price Series 282 Comparing the Series 285 Conclusion 287 Chapter 19 Testing and Optimizing Trading Systems 289 The Well-Chosen Example 289 Basic Concepts and Definitions 291 Choosing the Price Series 293 Choosing the Time Period 293 Realistic Assumptions 295 Optimizing Systems 297 The Optimization Myth 298 Testing versus Fitting 310 The Truth about Simulated Results 312 Multimarket System Testing 313 Negative Results 314 Ten Steps in Constructing and Testing a Trading System 315 Observations about Trading Systems 316 Chapter 20 How to Evaluate Past Performance 319 Why Return Alone Is Meaningless 319 Risk-Adjusted Return Measures 323 Visual Performance Evaluation 335 Investment Insights 343 Part V Fundamental Analysis Chapter 21 Fourteen Popular Fallacies, or What Not to Do Wrong 347 Five Short Scenes 347 The Fourteen Fallacies 349 Chapter 22 Supply-Demand Analysis: Basic Economic Theory 359 Supply and Demand Defined 359 The Problem of Quantifying Demand 362 Understanding the Difference between Consumption and Demand 363 The Need to Incorporate Demand 366 Possible Methods for Incorporating Demand 368 Why Traditional Fundamental Analysis Doesn’t Work in the Gold Market 371 Chapter 23 Types of Fundamental Analysis 373 The “Old Hand” Approach 373 The Balance Table 373 The Analogous Season Method 374 Regression Analysis 375 Index Models 376 Chapter 24 The Role of Expectations 379 Using Prior-Year Estimates Rather Than Revised Statistics 379 Adding Expectations as a Variable in the Price-Forecasting Model 380 The Influence of Expectations on Actual Statistics 380 Defining New-Crop Expectations 381 Chapter 25 Incorporating Inflation 383 Chapter 26 Seasonal Analysis 389 The Concept of Seasonal Trading 389 Cash versus Futures Price Seasonality 389 The Role of Expectations 390 Is It Real or Is It Probability? 390 Calculating a Seasonal Index 391 Chapter 27 Analyzing Market Response 403 Evaluating Market Response for Repetitive Events 403 Chapter 28 Building a Forecasting Model: A Step-by-Step Approach 413 Chapter 29 Fundamental Analysis and Trading 417 Fundamental versus Technical Analysis: A Greater Need for Caution 417 Three Major Pitfalls in Fundamental Analysis 418 Combining Fundamental Analysis with Technical Analysis and Money Management 426 Why Bother with Fundamentals? 427 Are Fundamentals Instantaneously Discounted? 428 Fitting the News to Price Moves 431 Fundamental Developments: Long-Term Implications versus Short-Term Response 432 Summary 435 Part VI Futures Spreads and Options Chapter 30 The Concepts and Mechanics of Spread Trading 439 Introduction 439 Spreads—Definition and Basic Concepts 440 Why Trade Spreads? 440 Types of Spreads 441 The General Rule 443 The General Rule—Applicability and Nonapplicability 443 Spread Rather Than Outright—An Example 445 The Limited-Risk Spread 446 The Spread Trade—Analysis and Approach 448 Pitfalls and Points of Caution 449 Chapter 31 Intercommodity Spreads: Determining Contract Ratios 453 Chapter 32 Spread Trading in Stock Index Futures 461 Intramarket Stock Index Spreads 461 Intermarket Stock Index Spreads 462 Chapter 33 Spread Trading in Currency Futures 471 Intercurrency Spreads 471 Intracurrency Spreads 473 Chapter 34 An Introduction to Options on Futures 477 Preliminaries 477 Factors That Determine Option Premiums 480 Theoretical versus Actual Option Premiums 483 Delta (the Neutral Hedge Ratio) 484 Chapter 35 Option Trading Strategies 487 Comparing Trading Strategies 487 Profit/Loss Profiles for Key Trading Strategies 489 Part VII Practical Trading Guidelines Chapter 36 The Planned Trading Approach 559 Step 1: Define a Trading Philosophy 559 Step 2: Choose Markets to Be Traded 560 Step 3: Specify Risk Control Plan 560 Step 4: Establish a Planning Time Routine 563 Step 5: Maintain a Trader’s Spreadsheet 563 Step 6: Maintain a Trader’s Diary 565 Step 7: Analyze Personal Trading 565 Chapter 37 Seventy-Five Trading Rules and Market Observations 567 Entering Trades 568 Exiting Trades and Risk Control (Money Management) 569 Other Risk-Control (Money Management) Rules 570 Holding and Exiting Winning Trades 570 Miscellaneous Principles and Rules 571 Market Patterns 572 Analysis and Review 573 Chapter 38 50 Market Wizard Lessons 575 Appendix A Introduction to Regression Analysis 589 Basics 589 Meaning of Best Fit 591 A Practical Example 593 Reliability of the Regression Forecast 593 Appendix B A Review of Elementary Statistics 597 Measures of Dispersion 597 Probability Distributions 599 Reading the Normal Curve (Z) Table 604 Populations and Samples 606 Estimating the Population Mean and Standard Deviation from the Sample Statistics 607 Sampling Distribution 608 Central Limit Theorem 609 Standard Error of the Mean 612 Confidence Intervals 612 The t-Test 614 Appendix C Checking the Significance of the Regression Equation 619 The Population Regression Line 619 Basic Assumptions of Regression Analysis 620 Testing the Significance of the Regression Coefficients 620 Standard Error of the Regression 627 Confidence Interval for an Individual Forecast 627 Extrapolation 630 Coefficient of Determination (r2) 630 Spurious (“Nonsense”) Correlations 634 Appendix D The Multiple Regression Model 637 Basics of Multiple Regression 637 Applying the t-Test in the Multiple Regression Model 640 Standard Error of the Regression 641 Confidence Intervals for an Individual Forecast 642 R2 and Corrected R2 642 F-Test 643 Analyzing a Regression Run 644 Appendix E Analyzing the Regression Equation 649 Outliers 649 The Residual Plot 650 Autocorrelation Defined 651 The Durbin-Watson Statistic as a Measure of Autocorrelation 651 The Implications of Autocorrelation 654 Missing Variables and Time Trend 655 Dummy Variables 658 Multicollinearity 663 Addendum: Advanced Topics 666 Appendix F Practical Considerations in Applying Regression Analysis 673 Determining the Dependent Variable 673 Selecting the Independent Variables 675 Should the Preforecast Period Price Be Included? 675 Choosing the Length of the Survey Period 676 Sources of Forecast Error 677 Simulation 678 Stepwise Regression 679 Sample Step-by-Step Regression Procedure 680 Summary 681 References and Recommended Readings 683 Index 685

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Book SynopsisTrend trading lets the market do the work for you Is your portfolio doing all it should? Are you looking for a market-focused way to increase returns? Try your hand at trend trading. Instead of analyzing the performance of a company, analyze the performance of the market as a whole.Table of ContentsIntroduction 1 Part I: Getting Started with Trend Trading 5 Chapter 1: What Is Trend Trading? 7 Chapter 2: Gathering What You Need to Get Started 15 Chapter 3: Considering the Risks of Trading 25 Chapter 4: Understanding the Advantages and Disadvantages of Trend Trading 37 Part II: Essential Trend Trading Strategies 47 Chapter 5: Price Waves You Can Surf to Profits 49 Chapter 6: Looking at Chart Indicator Tools 61 Chapter 7: Understanding Broad-Based Market Indicators 73 Chapter 8: Knowing What Time You Want to Trade 87 Chapter 9: How to Make Money When the Market Goes Up or Down 97 Part III: Becoming a Top Trader with the Five-Energy Method 103 Chapter 10: Cycle Timing Tools: Finding the Best Time to Enter a Trend 105 Chapter 11: Support and Resistance: Figuring Out the Best Price to Enter a Trend 115 Chapter 12: Using Momentum Indicators to Test the Strength of a Trend 131 Chapter 13: Scale: Confirming the Trade on a Longer Time Interval 143 Chapter 14: Putting It All Together: The Five-Energy Trading Methodology 153 Chapter 15: Seeing the Five Energies in Action 167 Part IV: Determining Where, When, Why, What, and How to Trade 191 Chapter 16: Understanding Leverage 193 Chapter 17: Choosing a Trading Time That Works for You 201 Chapter 18: Creating Watch Lists to Find the Best Opportunities 211 Chapter 19: Using Relative Strength to Make More Money 223 Chapter 20: Scanning Markets with Technology 233 Part V: Managing Risk and Following the Keys to Success 243 Chapter 21: Practicing Diversification 245 Chapter 22: Hedging Your Position to Protect You from Losing All Your Money 253 Chapter 23: Using Stop Signs to Keep You Safe 263 Chapter 24: Documenting Your Trades and Printing Your Charts 279 Chapter 25: Reviewing Your Trades — Always! 291 Part VI: The Part of Tens 299 Chapter 26: Ten Habits of Highly Effective Trend Traders 301 Chapter 27: Ten Common Misconceptions about Trend Trading 307 Index 313

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Book SynopsisImprove the Effectiveness of your Product Control Function Effective Product Control is a detailed how-to guide covering everything you need to know about the function. Considered essential reading for: New controllers entering the profession Auditors and regulators reviewing product control Established controllers wanting a refresher on the latest skills and core controls within the industry. Encompassing both a technical skills primer and key insights into core controls used to mitigate major risks emanating from trading desks, you will get expert advice on practical topics such as: The key IFRS and U.S. GAAP accounting standards for a trading desk How to approach the pricing of a financial instrument Market risk and how is it quantified The controls necessary for a trading desk Rogue trading and how it can be detected Valuation adjustments and why they are nTable of ContentsPreface xiii Acknowledgements xv About the Author xvii PART ONE Working in Product Control CHAPTER 1 An Introduction to Product Control 3 The Emergence of Product Control 3 The Purpose of Product Control 3 Different Types of Product Control 5 Skills, Qualifications and Experience 6 Organizational Structure 8 The Desk 10 CHAPTER 2 Changing Landscape of Product Control 15 Offshoring 15 XVA 19 Greater Levels of Capital 19 Greater Focus on Liquidity 20 Notes 21 CHAPTER 3 Key Stakeholders 23 Front Office: Sales and Trading Desk 23 Chief Operating Officers (COOs) 25 Operations 26 Middle Office 27 Market Risk 28 Financial Reporting 29 Management Reporting 29 Finance Change 30 IT 30 Operational Risk 32 Regulatory Reporting 32 Accounting Policy 34 Tax 34 Audit 36 Finance Shared Service 37 Summary 37 Notes 37 PART TWO Technical Skills CHAPTER 4 Accounting Standards: Recognition and Measurement 41 IAS 39 Financial Instruments: Recognition and Measurement 42 IFRS 9: Financial Instruments 60 IFRS 13: Fair Value Measurement 66 Notes 71 CHAPTER 5 Market Risk 75 What Is Market Risk and How Is It Generated? 75 How Is Market Risk Measured by a Bank? 77 Note 85 CHAPTER 6 Pricing Financial Instruments 87 How to Approach the Pricing of a Financial Instrument 87 Pricing Examples 89 Notes 105 CHAPTER 7 Internal Control 107 What Is Internal Control? 107 Establishing an Internal Control Framework 110 Example of Front to Back Internal Controls 117 Notes 122 PART THREE Profit and Loss Controls CHAPTER 8 System Feeds, End of Day Rates and Profit and Loss Estimates 127 System Feeds 127 End of Day 129 End of Day Rates 130 P&L Estimate 135 Note 136 CHAPTER 9 Review of New and Amended Trades 137 New Trades 137 Amended Trades 152 Notes 164 CHAPTER 10 Review of Mark-to-Market P&L 165 Defining Mark-to-Market P&L 165 Attributing MTM P&L 166 Risk-Based P&L Estimates 170 Changes in the End of Day Prices 173 When to Validate the MTM P&L 176 CHAPTER 11 Funding, Fees and Charges 177 Funding 177 Fees and Charges 185 Note 187 CHAPTER 12 Profit and Loss Adjustments 189 The Need for P&L Adjustments 189 Controlling P&L Adjustments 190 Notes 194 CHAPTER 13 Profit and Loss Commentary 195 Who Is the Reader? 198 When Is P&L Commentary Required? 198 CHAPTER 14 Profit and Loss Reconciliations and Sign-Offs 201 Flash vs. Actual 201 Desk P&L Sign-off 203 P&L Reconciliation 205 PART FOUR Valuations CHAPTER 15 Independent Price Verification 209 Components to IPV Process 210 Note 224 CHAPTER 16 Valuation Adjustments 225 Why Valuation Adjustments Are Required 225 Bid–Offer 225 Day 1 Reserves 234 Model Valuation Adjustment 234 XVA and Collateral Agreements 235 Recording and Reporting of VAs 239 Notes 239 PART FIVE Balance Sheet Controls CHAPTER 17 Balance Sheet Substantiation and Analysis 243 Substantiating the Balance Sheet 243 Frequency of the Balance Sheet Substantiation 248 Evidencing the Balance Sheet Substantiation 249 Unsupported Balances 249 Lines of Responsibility 255 CHAPTER 18 Dividending of Profit and Loss and FX Selldown 257 CHAPTER 19 Controlling Nostros 261 Introduction to Nostros 261 Controlling Nostros – Cash Breaks 262 Risk-Weighting Cash and AVE breaks 266 Provisioning for Nostro and AVE Breaks 267 Notes 268 PART SIX Financial Accounting and Reporting CHAPTER 20 Financial Accounting Entries 271 Financial Accounting Entries 271 Chart of Accounts 284 Accounting Rules Engine 286 Notes 289 CHAPTER 21 Financial Reporting and Note Disclosures 291 Context of Financial Reporting 291 Profit and Loss 293 Balance Sheet 295 Netting 297 Fair Value Hierarchy 304 Notes 309 PART SEVEN Supplementary Controls CHAPTER 22 New Product Proposals 313 Starting Line 313 The Review 314 The Sign-Off 319 CHAPTER 23 Rogue Trading 321 The Forefathers of Rogue Trading 321 The Fallout from Rogue Trading – The Bank 323 The Fallout from Rogue Trading – The Industry 325 Going Rogue 325 UBS Rogue Trading Incident, 2011 327 Notes 343 Index 347

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Book SynopsisGlobal Best Practice in Private Equity Investing Private Equity in Action takes you ona tour of the private equity investment world through a series of case studies written by INSEAD faculty and taught at the world''s leading business schools. The book is an ideal complement to Mastering Private Equity and allows readers to apply core concepts to investment targets and portfolio companies in real-life settings. The 19 cases illustrate the managerial challenges and risk-reward dynamics common to private equity investment. The case studies in this book cover the full spectrum of private equity strategies, including: Carve-outs in the US semiconductor industry (LBO) Venture investing in the Indian wine industry (VC) Investing in SMEs in the Middle East Turnaround situations in both emerging and developed markets Written with leading private equity firms and their advisors and rigorously tested in INSEAD''s MBA, Table of ContentsPreface v Section I GP–LP Relationships 1 Case 1 Beroni Group: Managing GP–LP Relationships 3 Case 2 Going Direct: The Case of Teachers’ Private Capital 11 Case 3 Pro-invest Group: How to Launch a Private Equity Real Estate Fund 39 Case 4 Hitting the Target: Optimizing a Private Equity Portfolio with the Partners Group 55 Section II Venture Capital 71 Case 5 Sula Vineyards: Indian Wine?—Ce n’est pas possible! 73 Case 6 Adara Venture Partners: Building a Venture Capital Firm 91 Case 7 Siraj Capital: Investing in SMEs in the Middle East 107 Section III Growth Equity 127 Case 8 Private Equity in Emerging Markets: Can Operating Advantage Boost Value in Exits? 129 Case 9 Slalom to the Finish: Carlyle’s Exit from Moncler 155 Case 10 Investor Growth Capital: The Bredbandsbolaget Investment 177 Section IV Leveraged Buyouts (LBOs) 201 Case 11 Chips on the Side (A): The Buyout of Avago Technologies 203 Case 12 Chips on the Side (B): The Buyout of Avago Technologies 229 Case 13 Going Places: The Buyout of Amadeus Global Travel Distribution 245 Section V Turnarounds and Distressed Investing 261 Case 14 Crisis at the Mill: Weaving an Indian Turnaround 263 Case 15 Vendex KBB: First Hundred Days in Crisis 279 Case 16 Turning an Elephant into a Cheetah: The Turnaround of Indian Railways 305 Section VI Private Equity in Emerging Markets 325 Case 17 Rice from Africa for Africa: Rice Farming in Tanzania and Investing in Agriculture 327 Case 18 Private Equity in Frontier Markets: Creating a Fund in Georgia 355 Case 19 Asian Private Equity: A Family Office’s Quest for Return 379 Acknowledgements 399 About the Authors 401

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Book SynopsisCommodity Derivatives In the newly revised Second Edition of Commodity Derivatives: Markets and Applications, expert trading educator and author Neil Schofield delivers a comprehensive overview of a wide variety of commodities and derivatives. Beginning with discussions of commodity markets generally before moving on to derivative valuation and risk management, the author then dives into individual commodity markets, like gold, base metals, crude oil, natural gas, electricity, and more.Schofield relies on his extensive experience at Barclays Investment Bank to offer readers detailed examinations of commodity finance and the use of commodities within a wider investmentportfolio.The second edition includes discussions of critical new topics like dual curve swap valuation, optionvaluation within a negative price environment using the Bachelier model, volatility skews, smiles, smirks, term structures for major commodities, and more. You'll find case studies on corporate faTable of ContentsPreface xi Chapter 1 Fundamentals of Commodities and Derivatives 1 1.1 Market overview 2 1.2 Market participants 3 1.3 Traded versus non-traded commodities 6 1.4 Forward contracts 8 1.5 Futures 8 1.6 Swaps 10 1.7 Options 11 1.8 Exotic options 14 Chapter 2 Derivative Valuation 18 2.1 Asset characteristics 18 2.2 Commodity prices and the economic cycle 18 2.3 Principles of commodity valuation 19 2.4 Forward price curves 21 2.5 Commodity swap valuation 32 2.6 Principles of option valuation 39 2.7 Measures of option risk management 44 Chapter 3 Risk Management Principles 58 3.1 Defining risk 58 3.2 Commodity market participants – the time dimension 60 3.3 Hedging corporate risk exposures 61 3.4 A framework for analysing corporate risk 62 3.5 Hedging customer exposures 63 3.6 Trading risk management 66 Chapter 4 Gold 76 4.1 The market for gold 76 4.2 Gold price drivers 81 4.3 The gold leasing and deposit market 91 4.4 Hedging 96 4.5 Trading gold 106 4.6 Yield enhancement 111 4.7 Summary 112 Chapter 5 Base Metals 114 5.1 Overview of base metal production 114 5.2 The copper lifecycle 115 5.3 Aluminium 119 5.4 The Steel market 120 5.5 The London Metal Exchange 122 5.6 Base metal price drivers 130 5.7 Electric Vehicles 133 5.8 Structure of market prices 134 5.9 Hedges for aluminium consumers in the automotive sector 139 5.10 Summary 157 Chapter 6 Crude Oil 159 6.1 Overview of energy markets 159 6.2 The value of crude oil 159 6.3 An overview of the physical supply chain 163 6.4 Refining crude oil 165 6.5 The demand for and supply of crude oil 172 6.6 Price drivers 179 6.7 The price of crude oil 189 6.8 Trading crude oil and refined products 195 Notes 209 6.9 Managing price risk along the supply chain 212 Chapter 7 Natural Gas 237 7.1 Formation of natural gas 237 7.2 Measuring natural gas 238 7.3 The physical supply chain 238 7.4 Deregulation and re-regulation 242 7.5 The demand for and supply of natural gas 245 7.6 Natural gas prices 250 7.7 Natural gas price drivers 257 7.8 Trading natural gas 260 7.9 Natural gas derivatives 263 Chapter 8 Electricity 280 8.1 What is electricity? 280 8.2 The physical supply chain 283 8.3 Market structure and regulation 285 8.4 Price drivers of electricity 291 8.5 Trading electricity – an overview 301 8.6 Electricity derivatives 313 Chapter 9 Plastics 332 9.1 The chemistry of plastic 332 9.2 The production of plastic 333 9.3 Monomer production 334 9.4 Polymerisation 334 9.5 Applications of plastics 335 9.6 Summary of the plastics supply chain 336 9.7 Price determination 336 9.8 Plastic price drivers 337 9.9 Forwards and swaps 338 9.10 Option strategies 340 Chapter 10 Bulk Commodities 341 10.1 The basics of coal 341 10.2 The demand for and supply of coal 343 10.3 Coal – the physical supply chain 346 10.4 Coal derivatives 349 10.5 Iron ore 353 10.6 Freight markets – the fundamentals 355 Chapter 11 Climate and Weather 368 11.1 The science of climate change 368 11.2 The consequences of climate change 371 11.3 The argument against climate change 372 11.4 History of human action against climate change 373 11.5 Price drivers of emissions markets 376 11.6 EU Emission Trading System 379 11.7 Emission derivatives 384 11.8 Weather derivatives 388 Chapter 12 Agriculture 394 12.1 Agricultural markets 394 12.2 Definitions 394 12.3 Agricultural products 395 12.4 Soft commodities 403 12.5 Ethanol 409 12.6 Price drivers 412 12.7 Exchange traded agricultural and ethanol derivatives 421 12.8 Over-the-counter agricultural derivatives 426 Chapter 13 Commodity-Linked Financing 433 13.1 The financing need 433 13.2 Project finance 437 13.3 Working capital and the asset conversion cycle 440 13.4 Longer-term debt funding solutions 454 Chapter 14 Commodity Investing 463 14.1 Commodity investors 463 14.2 Preferred instruments 465 14.3 Market size 465 14.4 Rationale for investing in commodities 466 14.5 Commodity indices 469 14.6 Total Return Swaps 478 14.7 Exchange traded products (ETPs) 481 14.8 Structured products 487 Glossary 499 Bibliography 507 Biography 510 Index 511

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Book SynopsisTable of ContentsForeword by Nassim Nicholas Taleb ix PART ONE: WHAT COMES FIRST 1 Chapter One: AT WAR WITH LUCK 3 Chapter Two: NATURE’S ADMONITION 29 Chapter Three: THE ETERNAL RETURN 57 PART TWO: WHAT COMES AFTER 97 Chapter Four: A TAXONOMY 99 Chapter Five: HOLISM 123 Chapter Six: BOLD CONJECTURES 163 AFTERWORD: AMOR FATI 195 Acknowledgments 211 Index 213

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Book SynopsisTable of ContentsIntroduction 1 About This Book 1 Foolish Assumptions 2 Icons Used in This Book 2 Beyond the Book 3 Where to Go from Here 3 Part 1: Getting Started with Stock Charts 5 Chapter 1: Brushing Up on Stock Charting Basics 7 Minimizing the Emotional Roller Coaster of Investing 7 Viewing Stocks from Varying Perspectives 8 Discovering All the Tools You Can Use with Your Charts 8 Getting Organized with Your Charts 9 Customizing Your Charts 10 Putting Everything Together 10 Chapter 2: Using Charts to Minimize Your Emotional Roller Coaster 11 Getting Ready for the Emotions of Owning a Stock 11 Understanding a few market basics 12 Leveling the playing field 14 Building a Chart to Track and Control Emotions 15 Checking Out Index Charts 17 Indexes around the world 18 Commodity indexes 19 The S&P 500 20 Defining Trends 20 Part 2: Viewing the Money Trail Through Different Lenses 23 Chapter 3: Focusing on Chart Settings 25 Choosing Chart Attributes 26 Starting with the time period, range, and spacing 26 Defining the price display 29 Displaying volume and toggles 33 Setting Overlays 34 Selecting Indicators 36 Common indicators 36 Volume and price as indicators 37 Chapter 4: Burning the Candle at Both Ends with Candlestick Charts 39 Deciphering the Parts of a Candlestick Chart 40 The candle body 41 Shadows on a hollow candle 42 Shadows on a filled candle 43 Windows 44 Introducing Color onto a Candlestick Chart 45 Crafting Your Chart 46 Reading and Using Your Chart to Make Decisions 48 Knowing when candles matter 48 Buying based on bullish candlestick patterns 49 Chapter 5: Spotting Differences with Bar Charts 51 Beginning with Bar Chart Basics 51 Price bar components 51 Different types of bar charts 52 Building a Bar Chart from the Ground Up 54 Putting a Bar Chart to Work 55 Gaps 55 Short bars versus long bars 56 Trading ranges, support, resistance, and breakout 56 Chapter 6: Seeing What’s Trending with Line Charts 59 What Is a Line Chart? 59 Making a Line Chart the Easy Way 61 Reading and Using Your Chart Line by Line 62 Adding support and resistance lines 63 Knowing when lines matter 64 Chapter 7: Getting the Lay of the Land with Area Charts 67 Comparing Area Charts to Line Charts 67 Making an Area Chart You Can Show Off 69 Strengthening or dimming the area display 69 Trying different colors 70 Adding color lines to emphasize change 70 Looking at legends and labels 71 Adding a Personal Touch with Styles 71 Knowing When Area Charts Matter 72 Part 3: Using Chart Tools for Decision Making 75 Chapter 8: Charting Different Time Periods 77 Converting Candlestick Charts to Different Periods 78 60-minute to daily candle display 78 Daily to weekly candle display 79 Daily to monthly candle display 79 Weekly to monthly candle display 80 Converting Bar Charts to Different Periods 81 60-minute to daily bar charts 81 Daily to weekly bar charts 81 Weekly to monthly bar charts 82 Converting Line and Area Charts to Different Periods 83 Taking It One Day at a Time with Daily Charts 84 Looking at the daily price movement in context 84 Using a range of one year (or more) with a daily chart 86 Examining market capitalization with daily charts 88 Embracing Short-Term Thinking with 60-Minute Charts 91 Highlighting intraday price action 92 Using 60-minute charts for index watching 92 Seeing the Big Picture with Weekly Charts 94 Weekly bar charts 94 Weekly line charts 95 The big benefits of weekly analysis 95 Knowing When a Monthly Chart Can Come in Handy 96 Recognizing major long-term lows and highs 96 Analyzing investor behavior 97 Picking the Right Chart for the Right Range 98 Shifting Your Focus to Closing Prices 99 Chapter 9: Reading a Price Chart 103 Running with Bulls and Sleeping with Bears: Uptrends and Downtrends 104 Recognizing an uptrend 104 Spotting a downtrend 105 Bucking the Trend: When a Stock Isn’t Trending 107 Looking at consolidation basics 107 Recognizing different periods of consolidation on a chart 108 Reading investor behavior during consolidation 109 Leveling Out: It’s All about the Base 110 Types of bases 110 The start of an uptrend from a base 114 Reaching the Top: Muffins, Spires, or Something Else? 115 The rounded top 116 The spire 117 The parabolic run 118 The double top 119 The range trading top 120 Scaling for Profit: It’s Only Money 121 Arithmetic scaling 121 Logarithmic scaling 123 Scaling guidelines 123 Chapter 10: Harnessing the Power of Overlays 125 Keeping Track of Moving Averages 126 Plotting a moving average 126 Looking at moving averages for different periods 129 Examining the uses and benefits of moving averages 133 Getting into the Groove with Channel Investing 135 Keltner channels 135 Bollinger Bands 139 Moving average envelopes 140 Finding Your Sweet Spot between Horizontal Support and Resistance 142 Chapter 11: Using Indicators to Facilitate Chart Analysis 145 Beginning with Indicator Basics 145 Divergence 146 Bounded and unbounded indicators 147 Rolling with Momentum Indicators 147 Moving average convergence divergence indicator (MACD) 148 Momentum displays that look like the MACD 150 Relative strength index (RSI) 153 Stochastics 158 Using Volume with Price 161 Chaikin money flow (CMF) 162 Money flow index (MFI) 163 On-balance volume (OBV) 165 Accumulation distribution (ACCUM/DIST) 166 Determining How Many Indicators to Use on One Chart 167 Chapter 12: Making Sense of Relative Strength Indicators 169 Relative Strength Investing Basics: Seeking Better-Performing Stocks 170 Sectors and industries 170 What makes a strong stock 171 Four things to know in relative strength investing 172 Measuring a Stock’s Relative Strength to the S&P 500, a Sector, and an Industry 172 Creating a ratio chart 173 Interpreting a ratio chart 175 Making broader comparisons 176 Ranking Stocks with SCTR 176 Introducing technical ranking 176 Plotting and interpreting the SCTR indicator 178 Looking at the components of the SCTR indicator 179 Breaking down peer groups for technical ranking 181 Understanding market movement in the rankings 181 Protecting your capital with SCTR 183 Using SCTR for base breakouts 185 Checking Out Performance Charts 186 Using Relative Rotation Graphs (RRG) 188 Part 4: Getting Organized and Managing Stock Trends 191 Chapter 13: Organizing Charts into Industry or Sector Groups 193 Recognizing the Importance of Sectors and Industry Groups 194 Creating and Populating ChartLists 195 Creating a list with a name and a number 195 Populating a list with one or more charts 197 Building lists with industry groups or sectors 198 Using the Number in Sorted Order button 198 Removing numbers from stocks inside a list 200 Organizing Your ChartLists 201 Interesting charts 202 Temporary scan lists 202 SCTR list 203 Watch list 203 Current open positions 203 Closed trades 203 Sector or industry lists 203 ETF list 204 Market overview 204 Index lists 204 Chapter 14: Keeping Track of What’s Going On 205 Making a Watch List 206 Surveying predefined scans 206 Saving scans to ChartLists 208 Creating and Using Your Three Main ChartLists 209 Deciding which stocks to move 210 Moving stocks into your three lists 211 Setting Alerts 212 Chapter 15: Conducting Breadth Analysis 215 Investigating Bullish Percent Indexes 216 Understanding how a buy or sell signal for a single stock is recorded 217 Interpreting the results for groups of stocks 217 Studying the Percentage of Stocks above the 200 DMA 220 Looking at the basic chart 220 Comparing breadth information 220 Reviewing the Breadth of Different Exchanges 222 The NASDAQ composite breadth 222 The New York Stock Exchange composite breadth 225 The Toronto Stock Exchange breadth 226 Chapter 16: A Quick Check of the Week’s Action 227 Counting the Days 227 Up days 228 Down days 228 Inside and outside days 229 Responding to Weird Price Action 230 Volume and price bar extremes 230 Outside reversal dates on weekly charts 231 Tracking Key Events 232 Options expiration days 233 Fed meeting dates 234 Spotting a Break of Support on Indexes 235 Part 5: Personalizing Your Stock Charts with Styles 237 Chapter 17: Customizing Candlestick Charts 239 Picking Your Personal Candlestick Indicators 240 Daily candlestick charts 240 Weekly candlestick charts 242 Saving Your Personal Style 244 Creating your default ChartStyle setting 244 Saving multiple ChartStyles 245 Trading Using a Candlestick Chart with Your Settings 246 Trading a daily candlestick chart with annotations 246 Trading a weekly candlestick chart 250 Sharing Your Customized Charts 251 Chapter 18: Fine-Tuning Your Bar Charts 253 Adjusting Bar Chart Settings to Your Liking 254 Colors 254 Overlays 255 Indicators 255 Special settings for weekly bar charts 256 Trading Using a Daily Bar Chart with Your Settings 257 Trading Using a Weekly Bar Chart with Your Settings 259 Chapter 19: Adjusting Your Line and Area Charts 263 Creating a Custom Weekly Line Chart 264 Developing Your Own Monthly Line Chart 266 Selecting your indicators 267 Saving your monthly line chart 268 Trading a monthly line chart 269 Setting Up a Specialized Monthly Area Chart 270 Part 6: Putting Your Stock Charting Expertise to Work 273 Chapter 20: Using Your Charts to Inform Your Buy, Hold, and Sell Decisions 275 Separating the Strong from the Weak 275 Sector summary 276 Industry summary 279 Knowing When to Hold ’Em and When to Fold ’Em 279 Checking the speed of movement 280 Looking at typical support levels 280 Gauging gains 280 Following technical clues to help manage your trades 281 Thinking about trading styles 283 Considering big picture trends 284 Selling Stocks Before They Head South 284 Chandelier exits 284 Parabolic stop and reverse 285 Chapter 21: Putting It All Together 287 Gauging the Market’s Direction 288 Market tops 288 Leading sectors 290 Market breadth 294 Position of the indexes compared to the 40-week moving average 295 Narrowing Your Focus to Certain Sectors 296 Choosing your fishing holes: Sectors with promise 297 Investing in different sectors for ballast 298 Using SCTR reports 298 Considering income stream investing 299 Using Targeted Scans 299 Working with Price Displays, Overlays, and Indicators 302 Price displays 302 Overlays and indicators 303 SCTR and the relative strength rankings 303 Taking Away Lessons from Your Wins and Losses 304 Journaling about the market and your trading 304 Tracking and analyzing your winners and losers 305 Continuing to buy winners 306 Refraining from holding losers 307 Part 7: The Part of Tens 309 Chapter 22: Ten Common Investing Mistakes and How to Avoid Them 311 Trying to Fight the Market Instead of Following It 311 Buying a Loser 312 Chasing a 25–35 Percent Off Sale in Great Companies 313 Falling for a 75 Percent Off Sale 314 Forgetting That Commodity Stocks Are Very Volatile 314 Buying a Story Instead of a Stock 315 Investing in a Sick Sector 316 Selling a Winner Too Soon 316 Continuously Avoiding What’s Worked 317 Not Buying Stocks in Falling Markets 318 Chapter 23: Ten Tips for Cashing In on Tomorrow’s Amazingly Great Stock 319 Being Prepared for Big Moves in a Short Time 319 Understanding That You Don’t Have to Be First to Buy 320 Waiting on the Big-Name IPOs 321 Seeing Huge Gaps on Earnings 321 Watching for Crisis in a Stock 322 Using Volatility to Warn the End Is Near 322 Measuring Volatility with the Average True Range 323 Realizing That the SCTR Won’t Help Find Exits 323 Working with Bollinger Bands 324 Using the U.S Dollar as a Guide 324 Index 327

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Book SynopsisTable of ContentsPreface xiii Acknowledgments xv About the Author xvii CHAPTER 1 Volatility and Options 1 1.1 What Is an Option? 1 1.2 Options Are Bets on Volatility 3 1.3 Option Premiums and Breakevens 6 1.3.1 Understanding Option Premiums 6 1.3.2 Relation Between Premium and Breakeven 7 1.4 Strike Conventions 9 1.5 What Is Volatility? 10 1.5.1 Implied Volatility, σimplied 11 1.5.2 Probabilities and Breakevens 15 1.5.3 Implied Volatility and Realized Volatility 15 1.5.4 Realized Volatility, σrealized 16 1.6 Trader's Summary 19 CHAPTER 2 Understanding Options Without a Model 21 2.1 Vanilla Options 21 2.1.1 Option Payoffs 22 2.2 Making Assumptions 23 2.3 Understanding Vt with Economic Assumptions 24 2.4 Delta and Delta Hedging 25 2.5 The Value Function 26 2.6 Defining Delta 27 2.7 Understanding Delta 30 2.8 Delta as the Probability of an In-the-Money Expiry 32 2.9 Applying Delta as the Probability of an ITM Expiry in Practical Trading 37 2.10 Constructing Vt 38 2.10.1 Jensen's Inequality: Vt = V(St, t, σi) ≥ max(St − K, 0) 40 2.10.2 Trading Intuition Behind Jensen's Inequality 40 2.10.3 American Options 41 2.10.4 Gradient of Vt 42 2.10.5 Drawing Vt 42 2.11 Option Deltas 44 2.12 A Note on Forwards 45 2.13 Put–Call Parity 46 2.14 Trader's Summary 48 CHAPTER 3 The Basic Greeks: Theta 49 3.1 Theta, ;; 50 3.1.1 Overnight Theta for an ATM Option 51 3.1.2 Dependence of ;;(St, t, σi) on St 52 3.1.3 Dependence of ;;(St, t, σi) on t 60 3.2 Trader's Summary 65 CHAPTER 4 The Basic Greeks: Gamma 67 4.1 Gamma, ;; 68 4.2 Gamma and Time Decay 70 4.3 Traders' Gamma, ;;trader 70 4.4 Gamma–Time Decay Trade-offs in More Detail 71 4.5 PnL Explain 73 4.5.1 Example: Gamma, Time Decay, and PnL Explain for a 1-Week Option 73 4.6 Delta Hedging and PnL Variance 76 4.7 Transaction Costs 78 4.8 Daily PnL Explain 79 4.9 The Gamma Profile 81 4.9.1 Gamma and Spot 81 4.9.2 Gamma and Implied Volatility 82 4.9.3 Gamma and Time 83 4.9.4 Total Gamma 84 4.10 Trader's Summary 84 CHAPTER 5 The Basic Greeks: Vega 87 5.1 Vega 88 5.2 Understanding Vega via the PDF 89 5.3 Understanding Vega via Gamma Trading 89 5.4 Vega of an ATMS Option Across Tenors 90 5.5 Vega and Spot 91 5.6 Dependence of Vega on Implied Volatility 94 5.7 Vega Profiles Applied in Practical Options Trading 95 5.8 Vega and PnL Explain 96 5.9 Trader's Summary 97 CHAPTER 6 Implied Volatility and Term Structure 99 6.1 Implied Volatility, σimplied 100 6.2 Term Structure 104 6.3 Flat Vega and Weighted Vega Greeks 104 6.3.1 Flat Vega 105 6.3.2 Weighted Vega 106 6.3.3 Beta-Weighted Vega 108 6.4 Forward Volatility, Forward Variance, and Term Volatility 108 6.4.1 Calculating Implied Forward Volatility 110 6.5 Building a Term Structure Model Using Daily Forward Volatility 111 6.6 Setting Base Volatility Using a Three-Parameter GARCH Model 114 6.6.1 Applying the Three-Parameter Model 116 6.6.2 Limitations of GARCH 117 6.6.3 Risk Management Using the Three-Parameter Model 118 6.6.4 Empirical GARCH Estimation 118 6.7 Volatility Carry and Forward Volatility Agreements 119 6.7.1 Volatility Carry in the GARCH Model 120 6.7.2 Common Pitfalls in Volatility Carry Trading 121 6.8 Trader's Summary 121 CHAPTER 7 Vanna, Risk Reversal, and Skewness 123 7.1 Risk Reversal 125 7.2 Skewness 127 7.3 Delta Space 129 7.4 Smile in Delta Space 130 7.5 Smile Vega 132 7.5.1 Smile Vega Notionals 134 7.6 Smile Delta 135 7.6.1 Considerations Relating to Smile Delta 136 7.7 Trader's Summary 137 CHAPTER 8 Volgamma, Butterfly, and Kurtosis 139 8.1 The Butterfly Strategy 140 8.2 Volgamma and Butterfly 141 8.3 Kurtosis 142 8.4 Smile 143 8.5 Butterflies and Smile Vega 144 8.6 Trader's Summary 145 CHAPTER 9 Black-Scholes-Merton Model 147 9.1 The Log-normal Diffusion Model 148 9.2 The BSM Partial Differential Equation (PDE) 148 9.3 Feynman-Kac 152 9.4 Risk-Neutral Probabilities 153 9.5 Probability of Exceeding the Breakeven in the BSM Model 154 9.6 Trader's Summary 155 CHAPTER 10 The Black-Scholes Greeks 157 10.1 Spot Delta, Dual Delta, and Forward Delta 157 10.1.1 Spot Delta 157 10.1.2 The ATM Strike and the Delta-Neutral Straddle 159 10.1.3 Dual Delta 160 10.1.4 Forward Delta 161 10.2 Theta 161 10.3 Gamma 163 10.4 Vega 164 10.5 Vanna 164 10.6 Volgamma 165 10.7 Trader's Summary 165 CHAPTER 11 Predictability and Mean Reversion 167 11.1 The Past and the Future 167 11.2 Empirical Analysis 168 APPENDIX A Probability 173 A.1 Probability Density Functions (PDFs) 173 A.1.1 Discrete Random Variables and PMFs 173 A.1.2 Continuous Random Variables and PDFs 174 A.1.3 Normal and Log-normal Distributions 176 APPENDIX B Calculus 179 Glossary 181 References 183 Index 185

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Book SynopsisDiscover the ins and outs of designing predictive trading models Drawing on the expertise of WorldQuant's global network, this new edition of Finding Alphas: A Quantitative Approach to Building Trading Strategies contains significant changes and updates to the original material, with new and updated data and examples. Nine chapters have been added about alphas models used to make predictions regarding the prices of financial instruments. The new chapters cover topics including alpha correlation, controlling biases, exchange-traded funds, event-driven investing, index alphas, intraday data in alpha research, intraday trading, machine learning, and the triple axis plan for identifying alphas. Provides more references to the academic literature Includes new, high-quality material Organizes content in a practical and easy-to-follow manner Adds new alpha examples with formulas and explanations If you're looking for the lTable of ContentsPreface xi Preface (to the Original Edition) xiii Acknowledgments xv About the WebSim Website xvii Part I Introduction 1 1 Introduction to Alpha Design 3By Igor Tulchinsky 2 Perspectives on Alpha Research 7By Geoffrey Lauprete 3 Cutting Losses 17By Igor Tulchinsky Part II Design and Evaluation 23 4 Alpha Design 25By Scott Bender and Yongfeng He 5 How to Develop an Alpha: A Case Study 31By Pankaj Bakliwal and Hongzhi Chen 6 Data and Alpha Design 43By Weijia Li 7 Turnover 49By Pratik Patel 8 Alpha Correlation 61By Chinh Dang and Crispin Bui 9 Backtest – Signal or Overfitting? 69By Zhuangxi Fang and Peng Yan 10 Controlling Biases 77By Anand Iyer and Aditya Prakash 11 The Triple-Axis Plan 83By Nitish Maini 12 Techniques for Improving the Robustness of Alphas 89By Michael Kozlov 13 Alpha and Risk Factors 95By Peng Wan 14 Risk and Drawdowns 101By Hammad Khan and Rebecca Lehman 15 Alphas from Automated Search 111By Yu Huang and Varat Intaraprasonk 16 Machine Learning in Alpha Research 121By Michael Kozlov 17 Thinking in Algorithms 127By Sunny Mahajan Part III Extended Topics 133 18 Equity Price and Volume 135By Cong Li and Huaiyu Zhou 19 Financial Statement Analysis 141By Paul A. Griffin and Sunny Mahajan 20 Fundamental Analysis and Alpha Research 149By Xinye Tang and Kailin Qi 21 Introduction to Momentum Alphas 155By Zhiyu Ma, Arpit Agarwal, and Laszlo Borda 22 The Impact of News and Social Media on Stock Returns 159By Wancheng Zhang 23 Stock Returns Information from the Stock Options Market 169By Swastik Tiwari and Hardik Agarwal 24 Institutional Research 101: Analyst Reports 179By Benjamin Ee, Hardik Agarwal, Shubham Goyal, Abhishek Panigrahy, and Anant Pushkar 25 Event-Driven Investing 195By Prateek Srivastava 26 Intraday Data in Alpha Research 207By Dusan Timotity 27 Intraday Trading 217By Rohit Kumar Jha 28 Finding an Index Alpha 223By Glenn DeSouza 29 ETFs and Alpha Research 231By Mark YikChun Chan 30 Finding Alphas on Futures and Forwards 241By Rohit Agarwal, Rebecca Lehman, and Richard Williams Part IV New Horizon – Websim 251 31 Introduction to WebSim 253By Jeffrey Scott Part V A Final Word 263 32 The Seven Habits of Highly Successful Quants 265By Richard Hu and Chalee Asavathiratham References 273 Index 291

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Book SynopsisTable of ContentsPreface xxxiii Acknowledgments xxxvii About the Authors xli Part 1 Introduction to Alternative Investments Chapter 1 What is an Alternative Investment? 3 1.1 Alternative Investments by Exclusion 3 1.2 Alternative Investments by Inclusion 4 1.3 The Blurred Lines between Traditional and Alternative Investments 8 1.4 A History of Alternative Investing: The U.S. Case 10 1.5 Investments are Distinguished by Return Characteristics 11 1.6 Investments are Distinguished by Methods of Analysis 14 1.7 Eight Other Characteristics that Distinguish Alternative and Traditional Investments 16 1.8 Five Goals of Alternative Investing 18 1.9 Two Pillars of Alternative Investment Management 20 1.10 Overview of This Book 22 Review Questions 23 Chapter 2 The Environment of Alternative Investments 25 2.1 The Participants 25 2.2 Alternative Investment Structures 33 2.3 Key Features of Fund Structures 36 2.4 Financial Markets 40 2.5 Regulatory Environment 42 2.6 Liquid Alternative Investments 43 2.7 Taxation 47 2.8 Short Selling 49 Review Questions 52 Notes 53 Chapter 3 Quantitative Foundations 55 3.1 Return and Rate Mathematics 55 3.2 Returns Based on Notional Principal 57 3.3 Internal Rate of Return 60 3.4 Problems with Internal Rate of Return 64 3.5 Other Performance Measures 73 3.6 Illiquidity, Accounting Conservatism, IRR, and the J-Curve 75 3.7 Distribution of Cash Waterfall 77 Review Questions 85 Note 86 Chapter 4 Statistical Foundations 87 4.1 Return Distributions 87 4.2 Moments of the Distribution: Mean, Variance, Skewness, and Kurtosis 90 4.3 Covariance, Correlation, Beta, and Autocorrelation 94 4.4 Interpreting Standard Deviation and Variance 104 4.5 Testing for Normality 111 4.6 Time-Series Return Volatility Models 114 Review Questions 116 Chapter 5 Foundations of Financial Economics 117 5.1 Informational Market Efficiency 117 5.2 The Time Value of Money, Prices, and Rates 122 5.3 The Three Primary Theories of the Term Structure of Interest Rates 127 5.4 Forward Interest Rates 129 5.5 Arbitrage-Free Models 131 5.6 Binomial Tree Models 134 5.7 Single-Factor Default–Free Bond Models 137 5.8 Single-Factor Equity Pricing Models 143 Review Questions 148 Note 149 Chapter 6 Derivatives and Risk-Neutral Valuation 151 6.1 Foundations of Forward Contracts 151 6.2 Forward Contracts on Rates 155 6.3 Forward Contracts on Equities 157 6.4 Forward Contracts on Assets with Benefits and Costs of Carry 165 6.5 Forward Contracts Versus Futures Contracts 171 6.6 Managing Long-Term Futures Exposures 178 6.7 Option Exposures 180 6.8 Option Pricing Models 186 6.9 Option Sensitivities 188 Review Questions 190 Notes 191 Chapter 7 Measures of Risk and Performance 193 7.1 Measures of Risk 193 7.2 Estimating Value at Risk (VaR) 198 7.3 Benchmarking and Performance Attribution 203 7.4 Ratio-Based Performance Measures 204 7.5 Risk-Adjusted Return Measures 210 Review Questions 214 Notes 214 Chapter 8 Alpha, Beta, and Hypothesis Testing 215 8.1 Overview of Beta and Alpha 215 8.2 Ex Ante Versus Ex Post Alpha 217 8.3 Single-Factor Models and Regression 220 8.4 Inferring Ex Ante Alpha From Ex Post Alpha 225 8.5 Return Attribution, Alpha, and Beta 226 8.6 Ex Ante Alpha Estimation and Return Persistence 230 8.7 Return Drivers 231 8.8 Using Statistical Methods to Locate Alpha 234 8.9 Sampling and Testing Problems 239 8.10 Statistical Issues in Analyzing Alpha and Beta 242 Review Questions 246 Notes 247 Part 2 Real Assets Chapter 9 Natural Resources and Land 251 9.1 Natural Resources Other Than Land 251 9.2 Land 256 9.3 Timber and Timberland 261 9.4 Farmland 263 9.5 Valuation and Volatility of Real Assets 268 9.6 Pricing and Historic Data Analysis 272 9.7 Contagion, Price Indices, and Biases 275 9.8 Key Observations Regarding Historical Returns of Timberland 278 9.9 Key Observations Regarding Historical Returns of Farmland 278 Review Questions 279 Notes 279 Chapter 10 Commodities 281 10.1 Investing in Commodities Without Futures 281 10.2 The Term Structure of Forward Prices on Commodities 288 10.3 Rolling of Forward and Futures Contracts 296 10.4 Normal Backwardation and Normal Contango 302 10.5 Commodity Exposure and Diversification 307 10.6 Expected Returns on Commodities 310 10.7 Commodity Futures Indices 312 10.8 Commodity Risk Attributes 314 10.9 Observations Based on Historical Returns 318 Review Questions 318 Notes 318 Chapter 11 Other Real Assets 319 11.1 Commodity Producers 319 11.2 Liquid Alternative Real Assets 322 11.3 Infrastructure 325 11.4 Intellectual Property Overview 336 11.5 Cash Flows of Intellectual Property 341 11.6 Visual Works of Art and Historical Performance Data 344 11.7 R&D and Patents as Unbundled Intellectual Property 346 11.8 Intellectual Property Conclusions 349 Review Questions 350 Notes 350 References 350 Chapter 12 Real Estate Assets and Debt 353 12.1 Categories of Real Estate 353 12.2 Advantages, Disadvantages, and Styles of Real Estate Investments 355 12.3 Real Estate Style Boxes 361 12.4 Residential Mortgages 363 12.5 Commercial Mortgages 372 12.6 Mortgage-Backed Securities Market 375 12.7 Liquid Alternatives: Real Estate Investment Trusts 380 12.8 Key Observations Regarding Historical Returns of Mortgage REITs 382 Review Questions 384 Notes 384 Chapter 13 Real Estate Equity 385 13.1 Real Estate Development 385 13.2 Commercial Real Estate Valuation 389 13.3 Details of the Income Approach to Real Estate Valuation 397 13.4 Illustration of the Income Method of Real Estate Valuation 402 13.5 Alternative Real Estate Investment Vehicles 403 13.6 Equity REIT Returns 409 13.7 Key Observations Regarding Historical Risks and Returns of Equity REITs 410 Review Questions 412 Part 3 Hedge Funds Chapter 14 Structure of the Hedge Fund Industry 415 14.1 Distinguishing Hedge Funds 415 14.2 Hedge Fund Fees 419 14.3 Hedge Fund Classification 431 14.4 Hedge Fund Returns and Asset Allocation 433 14.5 Evaluating a Hedge Fund Investment Program 438 14.6 Three Research Studies on Whether Hedge Funds Adversely Affect the Financial Markets 441 14.7 Hedge Fund Indices 442 14.8 Conclusion 451 Review Questions 451 Notes 451 Chapter 15 Macro and Managed Futures Funds 453 15.1 Macro and Managed Futures Strategies 453 15.2 Global Macro 455 15.3 Managed Futures 459 15.4 Systematic Trading 464 15.5 Four Core Dimensions of Managed Futures Investment Strategies 476 15.6 Systematic Futures Portfolio Construction 479 15.7 Eight Core Benefits of Managed Futures for Investors 483 15.8 Evidence on Managed Futures Returns 485 15.9 Benefits of Managed Futures Funds 493 15.10 Key Observations Regarding Historical Returns of Macro and Systematic Diversified Funds 499 Review Questions 499 Notes 499 Chapter 16 Event-Driven Hedge Funds 501 16.1 The Sources of Most Event Strategy Returns 501 16.2 Activist Investing 505 16.3 Merger Arbitrage 517 16.4 Distressed Securities Funds 524 16.5 Event-Driven Multistrategy Funds 532 Review Questions 534 Notes 534 Chapter 17 Relative Value Hedge Funds 535 17.1 Overview of Relative Value Strategies 535 17.2 Convertible Bond Arbitrage 536 17.3 Volatility Arbitrage 551 17.4 Fixed-Income Arbitrage 565 17.5 Relative Value Multistrategy Funds 575 Review Questions 578 Notes 578 Chapter 18 Equity Hedge Funds 579 18.1 Commonalities of Equity Hedge Funds 579 18.2 Sources of Return 580 18.3 Market Anomalies 584 18.4 Implementing Anomaly Strategies 590 18.5 The Three Equity Strategies 594 18.6 Equity Hedge Fund Risks 605 Review Questions 605 Notes 606 Chapter 19 Funds of Hedge Funds 607 19.1 Overview of Funds of Hedge Funds 607 19.2 Investing in Multistrategy Funds 616 19.3 Investing in Funds of Hedge Funds 619 19.4 Investing in Portfolios of Single Hedge Funds 622 19.5 Multialternatives and Other Hedge Fund Liquid Alternatives 624 19.6 Key Observations Regarding Historical Returns of Funds of Funds 628 Review Questions 631 Notes 631 Part 4 Private Securities Chapter 20 Private Equity Assets 635 20.1 Introduction to Private Equity Terms and Background 635 20.2 Overview of Three Forms of Pre-IPO Private Equity Investing 637 20.3 Venture Capital 639 20.4 Venture Capital as a Compound Option 647 20.5 Growth Equity 648 20.6 Buyouts and Leveraged Buyouts 651 20.7 Buyouts of Private Companies 653 20.8 Leveraged Buyouts (LBOs) 655 20.9 Merchant Banking 663 20.10 Dynamics of Private Equity Opportunities 663 Review Questions 665 Notes 666 Chapter 21 Private Equity Funds 667 21.1 Overview of Private Equity Funds 667 21.2 Private Equity Funds as Intermediaries 671 21.3 The LP and GP Relationship Life Cycle 677 21.4 Private Equity Fund Fees and Terms 680 21.5 Key Determinants of Venture Capital Fund Risks and Returns 687 21.6 Roles and Three Key Distinctions of Venture Capital and Buyout Managers 689 21.7 Leveraged Buyout Funds 689 21.8 Private Equity Liquid Alternatives 693 21.9 Private Equity Funds of Funds 698 21.10 Private Investments in Public Equity 699 21.11 Private Equity Secondary Markets and Structures 703 Review Questions 706 Notes 707 Chapter 22 Private Credit and Distressed Debt 709 22.1 Types of Fund Private Credit Vehicles 709 22.2 Fixed-Income Analysis 711 22.3 Credit Risk Analysis and the Bankruptcy Process 715 22.4 Leveraged Loans 725 22.5 Direct Lending 727 22.6 Mezzanine Debt 728 22.7 Distressed Debt 737 22.8 Private Credit Performance and Diversification 743 Review Questions 744 Note 744 References 745 Part 5 Structured Products Chapter 23 Introduction to Structuring 749 23.1 Overview of Financial Structuring 749 23.2 Major Types of Structuring 750 23.3 The Primary Economic Role of Structuring 751 23.4 Collateralized Mortgage Obligations 753 23.5 Structural Model Approach to Credit Risk 761 23.6 Interest Rate Options 766 23.7 Introduction to Collateralized Debt Obligations 768 Review Questions 773 Note 773 Chapter 24 Credit Risk and Credit Derivatives 775 24.1 An Overview of Credit Risk 775 24.2 Reduced-Form Modeling of Credit Risk 776 24.3 Credit Derivatives Markets 783 24.4 Interest Rate Swaps 786 24.5 Credit Default Swaps 793 24.6 Other Credit Derivatives 801 24.7 CDS Index Products 804 24.8 Five Key Risks of Credit Derivatives 805 Review Questions 807 Notes 807 Chapter 25 CDO Structuring of Credit Risk 809 25.1 Overview of CDO Variations 809 25.2 Balance Sheet CDOs and Arbitrage CDOs 812 25.3 Mechanics of and Motivations for An Arbitrage CDO 814 25.4 Cash-Funded CDOs Versus Synthetic CDOs 816 25.5 Cash Flow CDOs Versus Market Value CDOs 820 25.6 Credit Enhancements 821 25.7 Other Types of CDOs 823 25.8 Risks of CDOs 824 Review Questions 829 Chapter 26 Equity-Linked Structured Products 831 26.1 Structured Products and Six Types of Wrappers 831 26.2 Four Potential Tax Effects of Wrappers 832 26.3 Structured Products with Exotic Option Features 835 26.4 Popular Structured Product Types 843 26.5 The EUSIPA Classification 844 26.6 Global Structured Product Cases 848 26.7 Structured Product Valuation 850 26.8 Motivations of Structured Products 854 Review Questions 855 Notes 856 Index 857

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Book SynopsisTable of ContentsPreface xv Acknowledgments xvii About the CFA Institute Investment Series xix Chapter 1 Introduction to Financial Statement Analysis 1 Learning Outcomes 1 1. Introduction 1 2. Roles of Financial Reporting and Financial Statement Analysis 2 3. Primary Financial Statements and Other Information Sources 8 3.1. Financial Statements and Supplementary Information 9 3.2. Other Sources of Information 28 4. Financial Statement Analysis Framework 28 4.1. Articulate the Purpose and Context of Analysis 30 4.2. Collect Data 30 4.3. Process Data 31 4.4. Analyze/Interpret the Processed Data 31 4.5. Develop and Communicate Conclusions/Recommendations 32 4.6. Follow-Up 32 5. Summary 32 References 34 Practice Problems 34 Chapter 2 Financial Reporting Standards 37 Learning Outcomes 37 1. Introduction 37 2. The Objective of Financial Reporting 38 3. Standard-Setting Bodies and Regulatory Authorities 39 3.1. Accounting Standards Boards 39 3.2. Regulatory Authorities 41 4. The International Financial Reporting Standards Framework 46 4.1. Qualitative Characteristics of Financial Reports 46 4.2. Constraints on Financial Reports 48 4.3. The Elements of Financial Statements 49 4.4. General Requirements for Financial Statements 50 5. Comparison of IFRS with Alternative Reporting Systems 53 6. Monitoring Developments in Financial Reporting Standards 55 6.1. New Products or Types of Transactions 55 6.2. Evolving Standards and the Role of CFA Institute 55 7. Summary 57 Practice Problems 58 Chapter 3 Understanding Income Statements 61 Learning Outcomes 61 1. Introduction 62 2. Components and Format of the Income Statement 62 3. Revenue Recognition 68 3.1. General Principles 69 3.2. Accounting Standards for Revenue Recognition 70 4. Expense Recognition 73 4.1. General Principles 74 4.2. Issues in Expense Recognition 78 4.3. Implications for Financial Analysis 83 5. Non-Recurring Items and Non-Operating Items 84 5.1. Discontinued Operations 84 5.2. Unusual or Infrequent Items 85 5.3. Changes in Accounting Policies 86 5.4. Non-Operating Items 89 6. Earnings per Share 90 6.1. Simple versus Complex Capital Structure 90 6.2. Basic EPS 91 6.3. Diluted EPS 92 6.4. Changes in EPS 98 7. Analysis of the Income Statement 99 7.1. Common-Size Analysis of the Income Statement 99 7.2. Income Statement Ratios 101 8. Comprehensive Income 103 9. Summary 106 Practice Problems 108 Chapter 4 Understanding Balance Sheets 113 Learning Outcomes 113 1. Introduction 113 2. Components and Format of the Balance Sheet 114 2.1. Balance Sheet Components 115 2.2. Current and Non-Current Classification 116 2.3. Liquidity-Based Presentation 117 3. Current Assets and Current Liabilities 118 3.1. Current Assets 118 3.2. Current Liabilities 123 4. Non-Current Assets 127 4.1. Property, Plant, and Equipment 128 4.2. Investment Property 129 4.3. Intangible Assets 129 4.4. Goodwill 132 4.5. Financial Assets 135 4.6. Deferred Tax Assets 138 5. Non-Current Liabilities 139 5.1. Long-term Financial Liabilities 140 5.2. Deferred Tax Liabilities 140 6. Equity 141 6.1. Components of Equity 141 6.2. Statement of Changes in Equity 144 7. Analysis of the Balance Sheet 145 7.1. Common-Size Analysis of the Balance Sheet 146 7.2. Balance Sheet Ratios 153 8. Summary 156 Practice Problems 158 Chapter 5 Understanding Cash Flow Statements 163 Learning Outcomes 163 1. Introduction 163 2. Components and Format of the Cash Flow Statement 164 2.1. Classification of Cash Flows and Non-Cash Activities 165 2.2. A Summary of Differences between IFRS and US GAAP 167 2.3. Direct and Indirect Methods for Reporting Cash Flow from Operating Activities 168 3. The Cash Flow Statement: Linkages and Preparation 177 3.1. Linkages of the Cash Flow Statement with the Income Statement and Balance Sheet 178 3.2. Steps in Preparing the Cash Flow Statement 179 3.3. Conversion of Cash Flows from the Indirect to the Direct Method 191 4. Cash Flow Statement Analysis 192 4.1. Evaluation of the Sources and Uses of Cash 193 4.2. Common-Size Analysis of the Statement of Cash Flows 197 4.3. Free Cash Flow to the Firm and Free Cash Flow to Equity 202 4.4. Cash Flow Ratios 204 5. Summary 205 Practice Problems 206 Chapter 6 Financial Analysis Techniques 213 Learning Outcomes 213 1. Introduction 213 2. The Financial Analysis Process 214 2.1. The Objectives of the Financial Analysis Process 215 2.2. Distinguishing between Computations and Analysis 216 3. Analytical Tools and Techniques 218 3.1. Ratios 221 3.2. Common-Size Analysis 226 3.3. The Use of Graphs as an Analytical Tool 232 3.4. Regression Analysis 233 4. Common Ratios Used in Financial Analysis 234 4.1. Interpretation and Context 234 4.2. Activity Ratios 235 4.3. Liquidity Ratios 241 4.4. Solvency Ratios 246 4.5. Profitability Ratios 250 4.6. Integrated Financial Ratio Analysis 254 5. Equity Analysis 262 5.1. Valuation Ratios 262 5.2. Industry-Specific Ratios 265 5.3. Historical Research on Ratios in Equity Analysis 267 6. Credit Analysis 268 6.1. The Credit Rating Process 268 6.2. Historical Research on Ratios in Credit Analysis 269 7. Business and Geographic Segments 270 7.1. Segment Reporting Requirements 270 7.2. Segment Ratios 271 8. Model Building and Forecasting 274 9. Summary 275 References 275 Practice Problems 276 Chapter 7 Inventories 283 Learning Outcomes 283 1. Introduction 283 2. Cost of Inventories 285 3. Inventory Valuation Methods 286 3.1. Specific Identification 287 3.2. First-In, First-Out (FIFO) 287 3.3. Weighted Average Cost 287 3.4. Last-In, First-Out (LIFO) 288 3.5. Calculation of Cost of Sales, Gross Profit, and Ending Inventory 288 3.6. Periodic versus Perpetual Inventory Systems 290 3.7. Comparison of Inventory Valuation Methods 293 4. The LIFO Method 295 4.1. LIFO Reserve 295 4.2. LIFO Liquidations 296 5. Inventory Method Changes 303 6. Inventory Adjustments 304 7. Evaluation of Inventory Management 311 7.1. Presentation and Disclosure 312 7.2. Inventory Ratios 312 7.3. Financial Analysis Illustrations 313 8. Summary 323 Practice Problems 325 Chapter 8 Long-Lived Assets 339 Learning Outcomes 339 1. Introduction 340 2. Acquisition of Long-Lived Assets 340 2.1. Property, Plant, and Equipment 341 2.2. Intangible Assets 343 2.3. Capitalizing versus Expensing: Impact on Financial Statements and Ratios 348 2.4. Capitalization of Interest Costs 353 2.5. Capitalization of Internal Development Costs 355 3. Depreciation and Amortization of Long-Lived Assets 359 3.1. Depreciation Methods and Calculation of Depreciation Expense 360 3.2. Amortization Methods and Calculation of Amortization Expense 368 4. The Revaluation Model 369 5. Impairment of Assets 373 5.1. Impairment of Property, Plant, and Equipment 373 5.2. Impairment of Intangible Assets with a Finite Life 375 5.3. Impairment of Intangibles with Indefinite Lives 376 5.4. Impairment of Long-Lived Assets Held for Sale 376 5.5. Reversals of Impairments of Long-Lived Assets 376 6. Derecognition 376 6.1. Sale of Long-Lived Assets 377 6.2. Long-Lived Assets Disposed of Other than by a Sale 378 7. Presentation and Disclosures 379 8. Investment Property 389 9. Summary 393 Practice Problems 395 Chapter 9 Income Taxes 407 Learning Outcomes 407 1. Introduction 408 2. Differences between Accounting Profit and Taxable Income 408 2.1. Current Tax Assets and Liabilities 409 2.2. Deferred Tax Assets and Liabilities 410 3. Determining the Tax Base of Assets and Liabilities 413 3.1. Determining the Tax Base of an Asset 414 3.2. Determining the Tax Base of a Liability 415 3.3. Changes in Income Tax Rates 417 4. Temporary and Permanent Differences Between Taxable and Accounting Profit 418 4.1. Taxable Temporary Differences 419 4.2. Deductible Temporary Differences 419 4.3. Examples of Taxable and Deductible Temporary Differences 420 4.4. Temporary Differences at Initial Recognition of Assets and Liabilities 422 4.5. Business Combinations and Deferred Taxes 423 4.6. Investments in Subsidiaries, Branches, Associates, and Interests in Joint Ventures 423 5. Unused Tax Losses and Tax Credits 423 6. Recognition and Measurement of Current and Deferred Tax 424 6.1. Recognition of a Valuation Allowance 425 6.2. Recognition of Current and Deferred Tax Charged Directly to Equity 425 7. Presentation and Disclosure 428 8. Comparison of IFRS and US GAAP 433 9. Summary 436 Practice Problems 437 Chapter 10 Non-Current (Long-Term) Liabilities 443 Learning Outcomes 443 1. Introduction 443 2. Bonds Payable 444 2.1. Accounting for Bond Issuance 444 2.2. Accounting for Bond Amortization, Interest Expense, and Interest Payments 448 2.3. Current Market Rates and Fair Value Reporting Option 453 2.4. Derecognition of Debt 457 2.5. Debt Covenants 459 2.6. Presentation and Disclosure of Long-Term Debt 461 3. Leases 464 3.1. Lessee accounting 465 3.2. Lessor accounting 466 4. Introduction to Pensions and Other Post- Employment Benefits 468 5. Evaluating Solvency: Leverage and Coverage Ratios 472 6. Summary 475 Practice Problems 477 Chapter 11 Financial Reporting Quality 483 Learning Outcomes 483 1. Introduction 484 2. Conceptual Overview 484 2.1. GAAP, Decision-Useful, Sustainable, and Adequate Returns 486 2.2. GAAP, Decision-Useful, but Sustainable? 486 2.3. Biased Accounting Choices 487 2.4. Departures from GAAP 496 2.5. Differentiate between Conservative and Aggressive Accounting 498 3. Context for Assessing Financial Reporting Quality 501 3.1. Motivations 501 3.2. Conditions Conducive to Issuing Low-Quality Financial Reports 501 3.3. Mechanisms That Discipline Financial Reporting Quality 502 4. Detection of Financial Reporting Quality Issues 510 4.1. Presentation Choices 510 4.2. Accounting Choices and Estimates 516 4.3. Warning Signs 533 5. Summary 538 References 539 Practice Problems 540 Chapter 12 Applications of Financial Statement Analysis 545 Learning Outcomes 545 1. Introduction 545 2. Application: Evaluating Past Financial Performance 546 3. Application: Projecting Future Financial Performance 550 3.1. Projecting Performance: An Input to Market-Based Valuation 551 3.2. Projecting Multiple-Period Performance 555 4. Application: Assessing Credit Risk 559 5. Application: Screening for Potential Equity Investments 561 6. Analyst Adjustments to Reported Financials 565 6.1. A Framework for Analyst Adjustments 565 6.2. Analyst Adjustments Related to Investments 565 6.3. Analyst Adjustments Related to Inventory 566 6.4. Analyst Adjustments Related to Property, Plant, and Equipment 569 6.5. Analyst Adjustments Related to Goodwill 571 7. Summary 573 References 574 Practice Problems 574 Chapter 13 Intercorporate Investments 577 Learning Outcomes 577 1. Introduction 577 2. Basic Corporate Investment Categories 578 3. Investments in Financial Assets: IFRS 9 579 3.1. Classification and Measurement 580 3.2. Reclassification of Investments 582 4. Investments in Associates and Joint Ventures 583 4.1. Equity Method of Accounting: Basic Principles 584 4.2. Investment Costs That Exceed the Book Value of the Investee 587 4.3. Amortization of Excess Purchase Price 588 4.4 Fair Value Option 590 4.5. Impairment 591 4.6. Transactions with Associates 591 4.7. Disclosure 594 4.8. Issues for Analysts 595 5. Business Combinations 595 5.1. Acquisition Method 597 5.2. Impact of the Acquisition Method on Financial Statements, Post-Acquisition 599 5.3. Th e Consolidation Process 601 5.4. Financial Statement Presentation Subsequent to the Business Combination 607 5.5. Variable Interest and Special Purpose Entities 610 5.6. Additional Issues in Business Combinations That Impair Comparability 613 6. Summary 614 Practice Problems 615 Chapter 14 Employee Compensation: Post-Employment and Share-Based 627 Learning Outcomes 627 1. Introduction 627 2. Pensions and Other Post-Employment Benefits 628 2.1. Types of Post-Employment Benefit Plans 628 2.2. Measuring a Defined Benefit Pension Plan’s Obligations 631 2.3. Financial Statement Reporting of Pension Plans and Other Post-Employment Benefits 632 2.4. Disclosures of Pension and Other Post-Employment Benefits 645 3. Share-Based Compensation 656 3.1. Stock Grants 658 3.2. Stock Options 659 3.3. Other Types of Share-Based Compensation 662 4. Summary 662 Reference 663 Practice Problems 663 Chapter 15 Multinational Operations 673 Learning Outcomes 673 1. Introduction 674 2. Foreign Currency Transactions 675 2.1. Foreign Currency Transaction Exposure to Foreign Exchange Risk 676 2.2. Analytical Issues 680 2.3. Disclosures Related to Foreign Currency Transaction Gains and Losses 682 3. Translation of Foreign Currency Financial Statements 688 3.1. Translation Conceptual Issues 688 3.2. Translation Methods 693 3.3. Illustration of Translation Methods (Excluding Hyperinflationary Economies) 701 3.4. Translation Analytical Issues 704 3.5. Translation when a Foreign Subsidiary Operates in a Hyperinflationary Economy 716 3.6. Companies Use Both Translation Methods at the Same Time 720 3.7. Disclosures Related to Translation Methods 721 4. Multinational Operations and a Company’s Effective Tax Rate 727 5. Additional Disclosures on the Effects of Foreign Currency 730 5.1. Disclosures Related to Sales Growth 730 5.2. Disclosures Related to Major Sources of Foreign Exchange Risk 733 6. Summary 734 Practice Problems 736 Chapter 16 Analysis of Financial Institutions 749 Learning Outcomes 749 1. Introduction 749 2. What Makes Financial Institutions Different? 750 2.1. Global Organizations 753 2.2. Individual Jurisdictions’ Regulatory Authorities 755 3. Analyzing a Bank 756 3.1. The CAMELS Approach 756 3.2. Other Factors Relevant to Analysis of a Bank 773 3.3. An Illustration of the CAMELS Approach to Analysis of a Bank 777 4. Analyzing an Insurance Company 800 4.1. Property and Casualty Insurance Companies 800 4.2. Life and Health Insurance Companies 809 5. Summary 816 Practice Problems 817 Chapter 17 Evaluating Quality of Financial Reports 825 Learning Outcomes 825 1. Introduction 825 2. Quality of Financial Reports 827 2.1. Conceptual Framework for Assessing the Quality of Financial Reports 827 2.2. Potential Problems that Affect the Quality of Financial Reports 829 3. Evaluating the Quality of Financial Reports 840 3.1. General Steps to Evaluate the Quality of Financial Reports 841 3.2. Quantitative Tools to Assess the Likelihood of Misreporting 842 4. Earnings Quality 845 4.1. Indicators of Earnings Quality 845 4.2. Evaluating the Earnings Quality of a Company (Cases) 855 4.3. Bankruptcy Prediction Models 866 5. Cash Flow Quality 867 5.1. Indicators of Cash Flow Quality 867 5.2. Evaluating Cash Flow Quality 868 6. Balance Sheet Quality 876 7. Sources of Information about Risk 880 7.1. Limited Usefulness of Auditor’s Opinion as a Source of Information about Risk 880 7.2. Risk-Related Disclosures in the Notes 884 7.3. Management Commentary (Management Discussion and Analysis, or MD&A) 888 7.4. Other Required Disclosures 891 7.5. Financial Press as a Source of Information about Risk 892 8. Summary 892 References 894 Practice Problems 896 Chapter 18 Integration of Financial Statement Analysis Techniques 901 Learning Outcomes 901 1. Introduction 901 2. Case Study: Long-Term Equity Investment 903 2.1. Phase 1: Define a Purpose for the Analysis 903 2.2. Phase 2: Collect Input Data 903 2.3. Phase 3: Process Data and Phase 4: Analyze/Interpret the Processed Data 904 2.4. Phase 5: Develop and Communicate Conclusions and Recommendations (e.g., with an Analysis Report) 932 2.5. Phase 6: Follow-up 933 3. Summary 933 Practice Problems 933 Glossary 937 About the Editors 947 About the CFA Program 949 Index 951

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Book SynopsisTable of ContentsPrologue V Chapter One The Young Warren Buffett 1 It Begins 8 From Investment Partnership to a Compounding Conglomerate 13 Chapter Two Developing an Investment Philosophy 17 Howard Homan Buffett 19 Benjamin Graham 26 Charles Thomas Munger 32 In Closing . . . 47 Chapter Three Evolution of Value Investing 49 Stage One: Classic Value Investing 51 Stage Two: Valuing a Business, Not a Stock 65 Stage Three: The Value of Network Economics 81 Chapter Four Business-Driven Investing 115 Investment Zone 117 Chapter Five It’s Not That Active Management Doesn’t Work 147 Chapter Six The Money Mind: Sportsman, Teacher, Artist 185 Epilogue 199 Acknowledgments 207 Berkshire Hathaway Library 211 For Further Reading 215 Notes 225 Index 237

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Book SynopsisDiversify your portfolio with gold and silver Investing and trading in gold and silver is always a sound ideaand that goes double in a time of unusual market fluctuation. As people look for safe places to diversify their investment risk, you'll likely see the value of your investment go up where other stocks are vulnerable. Gold and silver saw increases in value of 16% and 15% respectively in 2019putting them among the top ten most desirable commodities out thereand are projected to experience even more of a bear market as the dollar wobbles in an uncertain post-COVID world. This year, 2020, gold and silver are set up to have their best year of price appreciation over the past 40+ years. Written in an easy-to-follow, no-jargon style by CFP and bestselling author, Paul Mladjenovic, Investing in Gold & Silver For Dummies explains the different complex processes and vehicles for buying gold and silver. You'll find out the best ways to add these to your portfolio, how to balance risk anTable of ContentsIntroduction 1 About This Book 1 Foolish Assumptions 2 Icons Used in This Book 2 Beyond the Book 3 Where to Go from Here 3 Part 1: Getting Started with Gold and Silver 5 Chapter 1: Exploring the World of Gold and Silver 7 Considering Gold and Silver for Your Situation 8 Assessing the world’s financial issues 9 Knowing how gold and silver can help you 9 Taking Action Before You Invest in Gold and Silver 10 Reviewing your portfolio 10 Boosting your cash position 11 Using your talents in your spare time 11 Doing your research on gold and silver 11 Chapter 2: Understanding Gold and Silver’s Greatest Benefit 13 Looking at Counterparty Risk in Today’s Investments 14 Stocks 15 Bonds 15 ETFs and mutual funds 16 Cash and bank investments 17 Real estate 18 Futures and options 18 Bitcoin and other cryptocurrencies 18 Knowing That Gold and Silver Have Risks, Too 19 Chapter 3: Adding Gold and Silver to Your Portfolio Mix 21 Defining Saving, Investing, Trading, and Speculating 22 Saving 22 Investing 22 Trading 23 Speculating 23 Building Your Financial Profile 24 For the conservative investor 24 For the growth investor 24 For the speculator 25 For the trader 25 Making Other Portfolio Considerations 26 Deciding on a percentage to put in metals 26 Choosing gold, silver, or both 27 Investing for income 27 Chapter 4: Recognizing the Risks 29 Exploring Different Kinds of Risks 31 Physical risks 31 Market risks 31 Futures exchange risks 32 Political risks 33 The risk of fraud 34 Minimizing Your Risk 35 Gaining knowledge 35 Being disciplined 36 Having patience 36 Using diversification 37 Keeping some risk management tools in your arsenal 38 Weighing Risk against Return with the 10 Percent Rule 39 Part 2: Spanning the Gold and Silver Landscape 41 Chapter 5: Investing in Gold 43 Comparing Gold to Other Investment Assets 44 Gold versus the financial world in general 45 Gold versus stocks versus currencies 46 Understanding the Gold Market 47 Gold demand 47 Gold supply 49 Going Over Gold’s Recent Bull and Bear Markets 49 The 1970s bull market 50 The 1980s bear market 50 The 1990s range-bound market 50 The bull and bear markets of 2000–2008 51 The bull market and bear market of 2008–2018 51 Making the Case for Gold Today 52 Chapter 6: Surveying Silver 55 Comparing Silver and Gold 56 Silver’s similarities to gold 56 Silver’s unique qualities 56 Digging into the Silver Market 57 Silver demand 58 Silver supply 59 Future drivers of silver 61 Starting with Silver’s Modern History in the 1970s 61 Picking Apart Silver’s Performance during 2000–2020 62 The first silver bull market (2000–2008) 63 The bull market of 2009–2011 and the bear market of 2011–2018 63 Silver versus the financial world in 2020 and beyond 64 Resources for Informed Silver Investors 66 Chapter 7: Making the Most of Mining Stocks 69 Examining the Essentials of Stock Investing 70 A profitable company 71 A growing industry 72 A healthy balance sheet 73 Knowing What to Look for When You Evaluate Mining Stocks 74 Value that isn’t cheaper than dirt 74 Management that you can dig 75 Politics: Not in my backyard 75 Distinguishing Different Types of Mining Stocks 76 The majors 77 Midtier mining companies 77 Junior miners, eureka! Exploratory companies 78 Considering the Risks of Mining Stocks 78 Boosting Your Returns 79 Generating income 79 Leveraging with warrants 80 Checking out mining stock indexes 82 Spotlighting the Pros 83 Rick Rule 83 Doug Casey 84 Chapter 8: Examining Mutual Funds and ETFs 85 Choosing Mutual Funds 86 The advantages of mutual funds 86 The downside of mutual funds 89 Keys to success with mutual funds 92 The prospectus: Netting it out 93 Mutual fund resources 94 Selecting Exchange-Traded Funds 94 The pros and cons of ETFs 95 The world of precious metals ETFs 96 Other ETFs for the metals-minded 97 ETF resources 98 Part 3: Looking at Other Gold and Silver Investing Vehicles 101 Chapter 9: Going Direct: Buying Bullion 103 Weighty Matters: Troy Ounces 103 Making the Case for Physical Ownership 104 What could go wrong with paper assets? 105 Bullion versus numismatics 106 The risks of owning physical metals 107 Going for Gold Physical Bullion 108 American Eagle Gold Bullion Coins 108 The American Buffalo Gold Bullion Coin 109 The Krugerrand 110 The Canadian Maple Leaf 110 Other gold bullion 111 Seeking Out Silver Physical Bullion 112 American Eagle Silver Bullion Coins 112 One-ounce rounds 113 Junk silver bags 113 The $1,000 bag of silver dollars 114 The 40 percent silver bag 114 Silver bars and ingots 115 So what kind of silver is best? 116 Gold and Silver Commemorative Coins 116 Bullion Costs, Fees, Dealers, and Resources 117 Chapter 10: Numismatic Coins and Collectibles 119 Understanding the Basics of Numismatic Coins 120 Aiming for profitable coin investing 120 Making the grade 121 Checking out information sources 122 Considering Collectible Coins 123 Gold coins 123 Silver coins 124 Other coins 125 A special category: Commemoratives 126 Exploring Coin Organizations and Services 126 Information sharing 126 Grading services 127 Selling Your Coins 128 Potential buyers 128 Pricing information 130 Chapter 11: Leveraged and Inverse ETFs 133 Feeling Bullish: Leveraged ETFs 133 Discovering what makes an ETF leveraged 134 Some advantages of leveraged ETFs versus futures and options 136 Checking out a real-life example of a gold and silver leveraged ETF 136 Feeling Bearish: Inverse ETFs and Inverse Leveraged ETFs 139 Using Leveraged and Inverse ETFs during the Market’s Ups and Downs 140 Bullish moves 141 Bearish moves 141 Other considerations 142 Looking at Resources for Leveraged and Inverse ETFs 142 Chapter 12: Focusing on Futures 145 Back to the Futures 145 How the futures market works 147 What can be traded as a futures contract 148 The Players in the World of Futures 149 The U.S exchanges 149 The international futures exchanges 150 Speculators 150 Hedgers 150 Regulators 151 The Fundamentals of Futures Contracts 152 A specified size 153 Specified quality 153 Specified prices 153 A specified delivery date 154 Metals Futures Contracts 154 Precious metals contracts 155 Mini-futures contracts 156 Pass the margin 156 Leverage: The double-edged sword 158 Basic Futures Trading Strategies 158 Basic strategy #1: Going long 159 Basic strategy #2: Going short 159 Basic strategy #3: Spreads 160 Using Fundamental and Technical Analysis with Futures 162 Futures versus Options on Futures 165 Futures Resources 166 Chapter 13: Considering Options 167 Discovering How Options Work 168 The call option 168 The put option 172 Placing Orders for Options 174 Options: Offering Something for Everyone 174 For those seeking gains 175 Income strategy #1: Writing covered calls 175 Income strategy #2: Writing puts 176 Minimizing Risks with Options 177 Trying Some Profitable Combinations 178 The zero-cost collar 178 The straddle 179 Checking Out Options in the World of Precious Metals 180 Options on mining stocks 180 An option with no expiration? 181 Options on ETFs and indexes 182 Options on futures 182 Following Golden Rules for Options Success 183 Consulting Options Resources 185 Part 4: Digging into Gold and Silver Investing Strategies 187 Chapter 14: Trying Out Trading Approaches 189 Like a Scout: Being Prepared 190 Be a voracious reader 190 Have your plan 190 Decide your market 191 Practice with simulated trading 192 Picking Out Your Vehicle 192 Selecting Your Trading Strategy 193 Choosing your market outlook 194 Stock trading coupled with options 194 Futures trading coupled with options 195 Trading the Gold-to-Silver Ratio (GSR) 196 Getting a little background on the GSR 197 Investing with the GSR 198 Trading with the GSR 198 Chapter 15: Using Technical Analysis 201 Defining Technical Analysis 202 Comparing Technical Analysis versus Fundamental Analysis 202 The guts of technical analysis 203 How about both? 204 The tools of the trade 205 Tracking the Trend 205 Trend lengths 207 Channels 207 Resistance and support 208 Checking Out Charts 209 Line charts 209 Bar charts 210 Candlestick charts 210 Point and figure charts 210 Picking Apart Chart Patterns 210 Head and shoulders 211 Reverse head and shoulders 211 Cup and handle 211 Double tops and bottoms 212 Triangles 212 Flags and pennants 212 Wedges 213 Gaps 213 Assessing Moving Averages 213 Simple moving averages (SMA) 213 Other averages 215 Investigating Indicators 215 Oscillators 215 The relative strength index (RSI) 215 Moving average convergence/divergence (MACD) 216 Crossovers and divergence 216 Bollinger bands 217 Focusing on the Short Term versus the Long Term 217 Resources for Technical Analysis 218 Chapter 16: Using Dealers and Brokers 219 Starting with Some General Points on Dealers and Brokers 220 Working with Gold and Silver Dealers 221 Sticking to major bullion coins 221 Investigating a dealer’s reputation and reviews 222 Getting at least three price quotes 222 Understanding ancillary charges 222 Deciding whether to get physical metals online or visit a local dealer 222 Picking apart a buy back policy 223 Getting the Scoop on Stock Brokerage Accounts 223 Beginning with types of stockbrokers 224 Assessing account types 224 Opening a stock brokerage account 225 Distinguishing Types of Orders 226 Stock brokerage services 226 Margin in a stock brokerage account 228 Introducing Types of Futures Brokers 230 Selecting a Futures Broker 231 Dealing with Futures Accounts 233 Seeing how margin works in a futures account 233 Watching out for problems in your futures account 234 Opening a futures account 235 Checking out futures account commissions and fees 236 Making futures orders 237 Considering managed futures accounts 240 Chapter 17: Tax and Retirement Considerations 243 Assessing Taxable Activity in Different Accounts 244 Regular investment accounts 244 Individual retirement accounts 246 Understanding Capital Gains and Losses 246 Looking at Tax-Deductible Activity 247 Surveying Special Tax Considerations 248 Gold and silver as collectibles 248 Tax rules for traders 249 Tax Resources to Keep You Up-to-Date 250 The IRS (of course!) 250 Helpful tax websites 251 An ounce of prevention 251 Adding Physical Precious Metals to an IRA 252 Precious metals allowed for IRAs 252 Companies where you can establish an account 253 Part 5: The Part of Tens 255 Chapter 18: Ten Reasons to Have Gold and Silver 257 Gold and Silver Provide Diversification 258 Gold and Silver Allow for Privacy 258 Gold and Silver Are Portable Wealth 259 Gold and Silver Ease Retirement Concerns 259 Gold Is a Safe Haven Asset 260 The Value of Gold and Silver Is Never Zero 260 Gold Retains Its Value in Bear Markets 261 Gold and Silver Have Enduring Demand 261 Gold and Silver Make Good Inflation Hedges 262 Gold Guards against Financial Bubbles 263 Chapter 19: Ten Ways to Add Gold and Silver to Your Portfolio 265 Major Gold and Silver Stocks 266 Junior Gold and Silver Stocks 266 Mutual Funds 266 Physical Metal ETFs 267 Bullion Coins 267 Numismatic Coins 268 Leveraged ETFs 268 Junk Silver 268 Gold and Silver Cryptocurrencies 269 Buying through Goldmoney and OWNx 270 Chapter 20: Ten (Or So) Tips for Gold and Silver Speculators and Traders 271 Focus on a Specialty 272 Do Research and More Research 272 Be a Contrarian 273 Limit Your Grubstake 273 Stagger Your Entry 273 Use the Right Speculative Vehicles 274 Have Multiple Positions 275 Use Technical Indicators 275 Do Some Hedging 275 Take a Profit 276 Use Brokerage Orders 276 Part 6: Appendixes 277 Appendix A: Resources For Gold and Silver Investors 279 Appendix B: Gold and Silver Investments 293 Index 299

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