Adapted from a lecture by the author and a follow-up discussion with eminent economists, this book includes an analysis of the South Sea Bubble and the application of the author’s new economic model to that and similar episodes. Open-minded investors would benefit from the book’s insights on speculative trading bubbles.
Not surprisingly, the 2008–2009 global financial crisis sent many financial professionals looking to history for a sense of appropriate context and perspective to understand the magnitude of such a catastrophic financial shock. This, in turn, sparked a general interest in financial history, but with few professional sources to turn to. At the 2014 Middle East Investment Conference, professor Adrian Bell, head of the ICMA Centre at the University of Reading's Henley Business School considered the question of whether or not modern finance existed in the Middle Ages.
Nearly 38% of global respondents to this week’s poll think the behavioral biases of investors are the primary cause of investment bubbles, while 33% of those polled believe responsibility lies with central banks and their easy money policies. Excessive leverage (19%) and government policies (7%) were less favored responses.
Today’s historically low interest rates and investors’ flight to safety have combined to raise interest in dividend-paying stocks. And while studies of the efficacy of dividend-investing strategies have been mixed, dividend investing remains a popular strategy. As such, it only seems appropriate to revisit an investing classic that first provided investors with a theoretical framework for determining the intrinsic value of stocks based on their dividends: John Burr Williams’s The Theory of Investment Value.
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