Practical analysis for investment professionals
31 October 2013

Weekend Reads for Investors: Fed Fixation

Posted In: Weekend Reads

In December 1996, former Federal Reserve Chairman Alan Greenspan, with an eye on the stock market, famously coined the term “irrational exuberance” to describe the collective investor psychology that brings about asset bubbles. After a brief hiccup, stocks went on to double over the next three years before succumbing to the dot-com crash of 2000.

He may have been early, but don’t say Greenspan didn’t warn you. Greenspan’s prescience with regards to the financial collapse of 2008, however, is less apparent in his new book, The Map and the Territory: Risk, Human Nature, and the Future of Forecasting. In this excerpt, Greenspan asks, “Why was virtually every economist and policy maker of note so blind to the coming calamity?” His self-proclaimed ignorance to the building crisis and the warnings of many is indeed astonishing. Sadly, “I wasn’t aware” has become a familiar refrain in Washington these days.

The easy money policies of central bankers around the globe have helped to buoy equity prices, leaving investors in high spirits. And recent investor sentiment readings from the American Association of Individual Investors confirm that equity investors have become, if not quite exuberant, well on their way. Contrarians will take note that bearishness in recent weeks has approached cyclical lows. With so few investors left on the sidelines, the argument goes, stocks may be hard-pressed to move much higher. For now, however, most investors seem content to take their cues from the central bankers.

Here are some worthwhile reads (and videos) you may have missed in recent weeks.

Financial Crisis Response

Behavioral Issues

Strategic Thinking



  • Tesla versus Fiat is a terrific lesson in investing and the economics of green energy. (GreenWood Investors via YouTube)
  • What it means to be a “Teslanaire.” (San Jose Mercury News)


Fundamental Matters

Big Data

Pension Crisis

Industry Icons

  • Carl Icahn shares a letter to Apple’s Tim Cook on his new website, Shareholders’ Square Table, and exchanges pleasantries with PIMCO’s Bill Gross:

Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

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About the Author(s)
David Larrabee, CFA

David Larrabee, CFA, was director of member and corporate products at CFA Institute and served as the subject matter expert in portfolio management and equity investments. Previously, he spent two decades in the asset management industry as a portfolio manager and analyst. He holds a BA in economics from Colgate University and an MBA in finance from Fordham University. Topical Expertise: Equity Investments · Portfolio Management

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