Market Panic: Wild Gyrations, Risks and Opportunities in Stock Markets

In Market Panic: Wild Gyrations, Risks and Opportunities in Stock Markets, leading markets commentator Stephen Vines examines the underlying nature of stock market panics and crashes, and what investors and companies can do when panic reigns. Stock markets are becoming more prone to panics and wild gyrations, as they become detached from the underlying economies they are supposed to reflect. At the same time, one of the best ways of understanding stock markets and investing in them comes at times when they are under the greatest pressures.

Author’s Note:

As for the book’s structure, the first chapter sets out my basic contention and looks at how booms develop and bursts and panics ensue. This is followed by an attempt to classify the types of panics affecting stock markets. This categorisation moves into new territory and should be helpful in promoting a better understanding of what causes panics and how they are likely to develop. In Chapter 3 a more detailed consideration is given to how the panic cycle develops and its main characteristics. This is followed by an examination of how panics are changing, primarily as the result of the growing separation between stock markets and the underlying economies and companies they are supposed to reflect.

Chapter 5 looks at market panics through the eyes of two market professionals who have been engaged in handling very large sums of money at times of crisis. Their experience and insights say a lot that cannot be contained in statistical summaries. From there I move on to the fraught subject of market psychology. This is a key issue: markets are run by human beings and without understanding how they behave there is no hope of understanding markets.

Moving on, I challenge the generally held assumption that investors are best protected by diversification. This seems to be a dubious proposition and leads to a lot of wasted effort, not to mention lots of wasted investment opportunities. Chapter 8 considers why markets are structurally imperfect and structurally troublesome. The concluding chapter attempts to apply these many theories and ideas to a practical end when unique opportunities arise from market panics.

Some friends have suggested that I should complete this book with great speed because, at the time of writing, the world’s stock markets are in a state of frenzy. I take a more sanguine view, which is that stock market frenzies will always be around. As one passes, another gathers pace. This book has been written in an attempt to make sense of these frenzies whenever they emerge.

Contents:

• Preparing for panics and profiting from them
• Types of panics
• The panic cycle
• A new age of panics
• The trader and the fund manager
• The psychology of panics
• Does diversification provide protection against stock market fluctuations?
• Is the market always right?
• Opportunity

Market Panic: Wild Gyrations, Risks and Opportunities in Stock Markets By Stephen Vines pdf