New Books in Investing, October 2011
Probable Outcomes by Ed Easterling. Investment climates are not uniform but nor are they random. Financial history contains periods, from a few years in duration to decades, of marketdly different character. During periods of one character, most stocks perform well above their long term average; during the opposite type of periods stocks perform poorly or even lose substantially. Easterling identifies the principal causes of the differences, describes how to recognize current conditions, and identifies what investment returns are likely over the next decades. Easterling primarily identifies causes as financial, such as interest rates and divident yields. He would have a richer analysis if he expanded it to recognize other political factors such as the degree and trend of government regulation and respect for (or lack of) property rights generally.
Sustainable Wealth by Axel Merk. Financial planning requires recognizing which factors we have more control over (e.g. our spending rate) versus less (e.g. the amount and pattern of our income) and adjusting both our plans and our investments to bring more under our control.
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