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Bonds Are Not Forever The Crisis Facing Fixed Income Investors,9781118659533

Bonds Are Not Forever The Crisis Facing Fixed Income Investors

by
Edition: 1st
Format: Hardcover
Pub. Date: 9/3/2013
Publisher(s): Wiley
Availability: This title is currently not available.

Summary

An up-close look at the fixed income market and what lies ahead

Interweaving compelling, and often amusing, anecdotes from author Simon Lack's distinguished thirty-year career as a professional investor with hard economic data, this engaging book skillfully reveals why Bonds Are Not Forever. Along the way, it provides investors with a coherent framework for understanding the future of the fixed income markets and, more importantly, answering the question, "Where should I invest tomorrow?"

Bonds Are Not Forever chronicles the steady decline in interest rates from their peak in the 1980s and the concurrent drop in inflation during that period. Lack explains how those two factors spurred a dramatic growth in borrowing among both governments and individuals. Along the way, Lack describes how a financial industry meant to provide capital needed to drive productivity and economic growth became disconnected from Main Street and explores the grave economic, social, and political consequences of that disconnect.

  • Provides practical solutions for avoiding the risk of falling bond markets and guaranteed negative real returns on savings
  • Explains how the bursting of the real estate bubble in 2007–2008 led to massive borrowing by governments as they attempted to offset a sharp fall in economic activity
  • Details how the trends of exploding debt and a financial sector that has grown much bigger than it needs to be have dramatically changed the game for savers

Offering a uniquely intimate, yet analytically thorough look at the coming fixed income crisis, Bonds Are Not Forever is must reading for investment professionals, as well as retail investors and their advisors.

Author Biography

Simon A. Lack has worked as a trader and hedge fund investor for more than thirty years. Following twenty-three years with J.P. Morgan, he founded SL Advisors, LLC, a Registered Investment Advisor, in 2009. Much of Simon's career at J.P. Morgan was spent in North American Fixed Income Derivatives and Forward FX trading, a business that he ran successfully through several bank mergers and culminated in his overseeing fifty professionals and $300 million in annual revenues. In addition, Simon Lack sat on J.P. Morgan's investment committee, allocating over $1 billion to hedge fund managers and founded the J.P. Morgan Incubator Funds, two private equity vehicles that took an economic stake in emerging hedge fund managers. Currently, Simon chairs the Investment Committee of Wardlaw-Hartridge School in Edison, New Jersey, and also chairs the Memorial Endowment Trust Investment Committee of St. Paul's Episcopal Church in Westfield, New Jersey. He is the author of The Hedge Fund Mirage: The Illusion of Big Money and Why It's Too Good to Be True, which received high praise from the mainstream financial press, including the Economist, the Financial Times, and the Wall Street Journal. Simon makes regular appearances on cable business shows as an expert on hedge funds and investing. He is a CFA charter holder.

Table of Contents

Preface

Acknowledgments

Chapter 1:  From High School to Wall StreetThe Bull Market Begins
Inflation Memories

As Bad As It Gets

Trading in Gilts

The Old Class Structure

A 19th Century Market

Finance Starts To Grow

Is Finance Good?

Investing After the Bubble

Chapter 2: A Brief History of Debt

Interest Rates in Ancient Times

Medieval Credit

The Beginnings of Modern Day Finance

Borrowing Reaches the Mass Market

Student Debt

Big Borrowers in History

What We Owe Now

Chapter 3: Derivatives Growth

Welcome to New York

Early Derivatives Growth

Swaps Take Off

Size Isn’t Everything

Derivatives Reach Omaha

Norwegian Wood

Chapter 4: Bond Market Inefficiencies for Retail
A Simple Market Model

Stocks Are Fairer Than Bonds

Why Change Is Slow

Structured Notes

The Internet Threatens the Swaps Oligopoly

Municipal Bonds

Chapter 5 Trading Derivatives
Before Banks Were Exciting

Computers and Swaps

Should Banks Innovate?

Growth in Innovation

Volcker’s Problem

Bring Me Clients with a Problem

Derivatives Mis-Steps

Trading by the Book

An Options Book Blows Up

Chapter 6:  Politics
Government Controlled Investing

Why Should We Worry?

Who Says There Is A Problem?

Look to the Future

Looking Ahead

Monetization – A Thought Experiment

Imperial Overstretch

More Debt Means More Banking

Chapter 7: Managing Risk 1990-1998
Risk-Oriented Market Making

Traders and Risk

Why Traders Are Bad at Budgeting

The Growth of Global Trading

Managing Obscure Basic Risks

What’s the Social Purpose?

Wall Street Fuels the Debt Growth

Chapter 8: Inflation
A Brief History

Germany’s Defining Economic Experience

Inflation Today

The Fed’s Huge Mistake

You Can’t Spend Quality Improvements

What Critics Say

Measuring What They Can, Not What Counts

Chapter 9: Bonds Are Not Forever
Putting it all Together

Wall Street Built It

Make Your Own Bond

High Dividend Low Beta

Hedged Dividend Capture

Master Limited Partnerships (MLPs)

Deep Value Equities

Debt is Bad

Bonds Are Not Forever

About the Author

Index

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