Wall Street Revalued: Imperfect Markets and Inept Central Bankers

WALL STREET REVALUED: Imperfect Markets and Inept Central Bankers......Page 1
Contents......Page 5
Foreword......Page 7
1: Introduction......Page 13
2: Synopsis......Page 27
3: Interest Rate Levels and the Stock Market......Page 37
4: Interest Rate Changes and Share Price Changes......Page 49
5: Household Savings and the Stock Market......Page 53
6: A Moderately Rather than a Perfectly Efficient Market......Page 61
7: The Efficient Market Hypothesis......Page 69
8: Testing the Imperfectly Efficient Market Hypothesis......Page 79
9: Other Claims for Valuing Equities......Page 93
10: Forecasting Returns without Using Value......Page 103
11: Valuing Stock Markets by Hindsight Combined with Subsequent Returns......Page 109
12: House Prices......Page 117
13: The Price of Liquidity – The Return for Holding Illiquid Assets......Page 121
14: The Return on Equities and the Return on Equity Portfolios......Page 127
15: The General Undesirability of Leveraging Equity Portfolios......Page 133
16: A Rare Exception to the Rule Against Leverage......Page 143
17: Profits are Overstated......Page 149
18: Intangibles......Page 157
19: Accounting Issues......Page 171
20: The Impact on q......Page 183
21: Problems with Valuing the Markets of Developing Economies......Page 187
22: Central Banks’ Response to Asset Prices......Page 193
23: The Response to Asset Prices from Investors, Fund Managers and Pension Consultants......Page 203
24: International Imbalances......Page 207
25: Summing Up......Page 209
Appendix 1: Sources and Obligations......Page 211
Appendix 2: Glossary of Terms......Page 215
Appendix 3: Interest Rates, Profits and Share Prices......Page 221
Appendix 4: Examples of the Current (Trailing) and Next Year’s (Prospective) PEs Giving Misleading Guides to Value......Page 229
Appendix 5: Real Returns from 17 International Equity Markets Comparing 1899–1954 with 1954–2008 and Showing Their Variance Compression......Page 231
Appendix 6: Errors in Inflation Expectations and the Impact on Bond Returns......Page 233
Appendix 7: An Algebraic Demonstration that Negative Serial Correlation can make the Leverage of an Equity Portfolio Unattractive......Page 245
Appendix 8: Correlations between International Stock Markets......Page 247
Bibliography......Page 249
Index......Page 251
colour plates......Page 259