Books about investing during bear markets/crashes...

[buriedbeds]

Not sure if this should be posted in books or in here; I took my best guess that since this isn't for poker-related books it might be a better fit here. If I'm wrong, all apologies; let me know and I'll repost wherever it's deemed to better fit.

I was wondering if anyone has recommendations for good books regarding successful investing during bear markets and/or crashes. I'd also be interested in good books related to learning more about making money during these periods (not strictly via investment, i.e. what sorts of industries tend to fair well - or at least better - during recessions and depressions, strategies for best getting through such periods with regards to employment, etc.).

Thanks very much for any recommendations-

-bb.

[ewile]

Stan Weinstein, Profiting In Bull And Bear Markets.

Classic.

[laserboy]

Not all bear markets are created equal. During the deflationary environment of the 1930s, you would have done well in US treasuries. During the stagflationary environment of the 1970s, you would have done well in commodities and hard assets. During the Nasdaq crash of the early 2000s, you would have done well in real estate.

We are more fortunate than our counterparts from the 1930s in that we have wasy access to a wide selection of asset classes and international markets. There's always a bull market somewhere.

I like reading Jim Rogers' books (Hot Commodities, Investment Biker, Adventure Capitalist). FWIW, he and George Soros guided the Quantum Fund to 4000% returns during the 1970s while the US stock markets were tanking. Dan Denning and Marc Faber also maybe. To be honest, there really aren't a lot of good books out there. You have to be willing to go against the grain.

[Nonononono]

Excellent recommendations above. I'd suggest "Financial Reckoning Day: Surviving the Soft Depression of the 21st Century," by Bill Bonner.

[buriedbeds]

[ QUOTE ]
Not all bear markets are created equal. During the deflationary environment of the 1930s, you would have done well in US treasuries. During the stagflationary environment of the 1970s, you would have done well in commodities and hard assets. During the Nasdaq crash of the early 2000s, you would have done well in real estate.

We are more fortunate than our counterparts from the 1930s in that we have wasy access to a wide selection of asset classes and international markets. There's always a bull market somewhere.

I like reading Jim Rogers' books (Hot Commodities, Investment Biker, Adventure Capitalist). FWIW, he and George Soros guided the Quantum Fund to 4000% returns during the 1970s while the US stock markets were tanking. Dan Denning and Marc Faber also maybe. To be honest, there really aren't a lot of good books out there. You have to be willing to go against the grain.

[/ QUOTE ]

Thanks very much to you and the others who posted suggestions; I really appreciate it. Maybe what would be most helpful to me would be a good economic history book that could go in to more depth regarding the points you made above (what worked in what environments and why).

I've got plenty of political history under my belt, but not a ton of econ history...does anyone have any suggestions along those lines?

Thanks again; I appreciate the responses-

-bb.

[DesertCat]

Ben Graham's "The Intelligent Investor" lays out much of the philosophy that enabled Buffett to prosper greatly in the 1970's bear markets (getting almost entirely out before the "Nifty Fifty" bubble burst), as well as profiting greatly in the 1987 crash.

Once you know how to value companies rationally, beta (volatility) becomes your friend. Crashes aren't to be feared, they are greatly anticipated. Buffett's quote when the market hit rock bottom in 73, "I feel like an oversexed man in a harem!".

Ben Graham's parable of Mr. Market, as summarized by Warren Buffett.

“Ben Graham, my friend and teacher, long ago described the mental attitude toward market fluctuations that I believe to be most conducive to investment success. He said that you should imagine market quotations as coming from a remarkably accommodating fellow named Mr. Market who is your partner in a private business. Without fail, Mr. Market appears daily and names a price at which he will either buy your interest or sell you his.

Even though the business that the two of you own may have economic characteristics that are stable, Mr. Market's quotations will be anything but. For, sad to say, the poor fellow has incurable emotional problems. At times he feels euphoric and can see only the favorable factors affecting the business. When in that mood, he names a very high buy-sell price because he fears that you will snap up his interest and rob him of imminent gains. At other times he is depressed and can see nothing but trouble ahead for both the business and the world. On these occasions he will name a very low price, since he is terrified that you will unload your interest on him.

Mr. Market has another endearing characteristic: He doesn't mind being ignored. If his quotation is uninteresting to you today, he will be back with a new one tomorrow. Transactions are strictly at your option. Under these conditions, the more manic-depressive his behavior, the better for you.

But, like Cinderella at the ball, you must heed one warning or everything will turn into pumpkins and mice: Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence. Indeed, if you aren't certain that you understand and can value your business far better than Mr. Market, you don't belong in the game.”

[DesertCat]

[ QUOTE ]

I like reading Jim Rogers' books (Hot Commodities, Investment Biker, Adventure Capitalist). FWIW, he and George Soros guided the Quantum Fund to 4000% returns during the 1970s while the US stock markets were tanking. Dan Denning and Marc Faber also maybe. To be honest, there really aren't a lot of good books out there. You have to be willing to go against the grain.

[/ QUOTE ]

Jim Rogers is a brilliant investor. But I never bought his recent foray into commodities, he sounded just like oil bulls in 1978. And unfortunately, it appears he might have been crippled by it. His clients commodity accounts at Refco were (allegedly) not held separate from Refcos accounts, and he can no longer gain access to them.

Following the advice of market commentators, esp. permabears like Marc Faber, an exercise in futility. These guys have predicted thirty of the last five bear markets. No-one can time the market, there is no macro forecastor who is better than flipping a coin. Bad predictions that keep you out of rising markets for a few years to await a bear market will hurt your returns worse than just riding out most bear markets.

[laserboy]

These are fairly complicated topics and many of the main points are up for debate. I specifically mentioned Jim Rogers because, though they are not specifically about bear market investing, he presents complicated macroeconomic topics in a very accessible manner and the books are good reads regardless of your economic views. If you like reading about history and world cultures, I am almost certain that you will enjoy his books.

Nonononono mentioned another good book called Financial Reckoning Day. This book has a lot of what you are looking for. Like most books, you have to sift the good information from the bad. They also have a website called the Daily Reckoning. You can browse some of their articles to see what they are all about. They also have a fairly good book list.

Daily Reckoning

[laserboy]

Jim Rogers is a billionaire many times over and was called the best securities analysis professor in the country by Warren Buffett. I really doubt he needs to qualify his investment credentials with anyone.

And I'm not sure what you're definition of a "permabear" is, but Marc Faber has stated that he thinks the Nikkei will rise over 200% in the coming years. Sounds pretty bullish to me. The fact that some people choose to invest in other asset classes besides the S&P500 does not make them "permabears".

Jim Rogers and Marc Faber are true value investors. They buy when things are cheap and sell when they are expensive. Equities in other parts of the world are significantly cheaper than they are in the US. US equities are extremely expensive by historical standards. These are empirical facts.

But don't take my word for it. Take the advice of "market timers" like Warren Buffett, George Soros, Paul Volcker, Bill Gross, Sir John Templeton, and Steven Roach who have all expressed similar views in recent years.

[DesertCat]

[ QUOTE ]
Jim Rogers is a billionaire many times over and was called the best securities analysis professor in the country by Warren Buffett.

[/ QUOTE ]

As I said, he's brilliant. But his maneuver into commodities didn't come with the same basic protections you'd have with any stock brokerage account. And he and his clients are paying for it now.



[ QUOTE ]

Jim Rogers and Marc Faber are true value investors. They buy when things are cheap and sell when they are expensive. Equities in other parts of the world are significantly cheaper than they are in the US. US equities are extremely expensive by historical standards. These are empirical facts.

But don't take my word for it. Take the advice of "market timers" like Warren Buffett, George Soros, Paul Volcker, Bill Gross, Sir John Templeton, and Steven Roach who have all expressed similar views in recent years.

[/ QUOTE ]

Calling trends in commodities prices is hardly a value investor type of viewpoint.

And Buffett, Templeton, Gross, etc, have all been concerned about how expensive the market is for anywhere from ten to twenty years. A stopped clock is right twice a day too.

Value investors have shown they have no great predictive ability for market moves. Sure, the market is expensive by historical standards, but that doesn't help you figure when it will get cheap again. And historical standards don't take into account factors like todays capital gains rates and interest rate levels that can change what's cheap or not.

I have an acquaintance who's a value investor. He became convinced that we were in the middle of a housing bubble (and showed me compelling facts to support his contention), so he rented his home instead of buying it. Five years ago! It's turned out to be a horrible, horrible decision.