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consumer spending, 71, 72“74
Death or Glory (DoG), 257
deficit spending, 69“70, 71, 77
DeBondt, Werner, 48“49
exported goods, 75“76
Debt:
Federal Reserve monetary policy,
government (see Government debt)
70“71
personal, 271, 273“274
government spending, 71“72, 76“77
Decision-making skills, 4, 14“15
key to, 83“84
Deficit spending, 69“70, 71, 77
longer-term trends, 77“79
Deflation, 98“99, 106, 112“113
productivity of U.S. companies, 79“84
Detroit Pistons, 230“231
savings rate, personal, 71, 73“74
Devaluation of money, 119“120,
Economic wealth, 82“83
122“125
Efficient market hypothesis, 38“40,
DeVore, Irven, 240
47“48
Dickson, Chip, 184
contradictions to, 49“50
Dirksen, Everett, 144
dogma of, 51“52
Dollar-cost averaging, 250“252
luck of investors™ performance, 50“51
Dollar(s). See also Money
stock prices, 40
creation of, 129“130
winner and loser study, 48“49
value against Chinese currency, 133
Eisenhower, Dwight, 170
value against euro, 130“132
302 Index



Foreign investments, 134“135, 271
Elasticity, concept of, 205“206
Foundation series, 271
EMC, 43, 54“55, 285
Four new horsemen of the NASDAQ, 43
Emotional intelligence (EQ), 286“287
Freud, Anna, 21
Emotion and investing:
Freud, Sigmund, 20, 21
emotional mood swings, 175“176
Friedman, Milton, 87, 91, 101“102
emotional response control, 58“60,
Fuller, Russell, 51
243“246, 284“285
Full Metal Jacket (movie), 238
self-control issues, 33“34, 259“262
sentiment as predictor of future returns,
G
45“46
Gage, Phineas, 24“25
Employment rates, 187“189
Galbraith, John Kenneth, 176
Envy, 275“277
Galbraith, Steve, 184
Equity-risk premium, 139“140
German economy:
Etoys, 56, 58, 246“247, 251
growth of, 75
Euro, 119“120, 130“132
inflation, 96“97, 102, 106
Exchange rates. See currency prices
German unemployment rate, 75
Exported goods, 75“76
Gigerenzer, Gerd, 236“237
F Glengarry Glen Ross (movie), 246“247
The Godfather: Part II, 55
Fallows, James, 195
“Goes to eleven,” 156“157
Favale, Vinnie, 28“29
Gold, 92
Federal Reserve, 70“71, 103“105
dollar value linked to, 93“94
Fed model, 171“174, 176“177
investment in, 256“257
Fehr, Ernst, 100
prices, 54, 161“162
Fei, 92“93
return on investment, 171, 230
Ferrigno, Lou, 177
Goldilocks view of inflation, 97“100,
Fiat money, 93“94
108“109, 113
Financial mast-strapping, 260“262
Goleman, Dan, 286“287
Financial news and information, 252“254
Gore, Al, 146
Financial plans, 285“286
Government bonds. See Bonds
Financial risk, 268. See also Low-risk
Government debt, 78“79, 126“128
investments
interest rates and, 146“149
amount of risk, choosing, 279“282
problems with, 127“130
productivity as cure, 273“275
productivity and, 274“275
risk-reduction, 269“271, 282
projection of, 144“146, 276
stocks and, 279“282
saving money and, 145
First Contact (movie), 94
social security fund and, 146
Fisher, Irving, 153, 154
trends in, 268
Fixed-rate loans, 110, 221“223, 271
U.S. economy and, 146“148
Foley, Jan, 131
U.S. overseas assets, 126
Fooled by Randomness (Taleb), 170,
Government spending, 71“72, 76“77
255
The Graduate (movie), 229
Foraging societies, 240“241
The Great Crash (Galbraith), 176
Ford, Gerald, 20, 86
Index 303



bonds and, 150, 151, 200, 201
Great Depression, 118, 163, 216
causes of, 101“103
Greenspan, Alan, 42, 71, 106, 149,
currency prices and, 121“122
222
deferred payment and, 96
Gross, Bill, 273
defined, 95
Gross domestic product (GDP),
deflation, 98“99, 106
146“148
effects of, 97
Guth, Werner, 27
in Germany, 96“97, 102, 106
H Goldilocks view of, 97“100, 108“109,
113
Hare, Brian, 233
hyperinflation, 96“97, 102
Hawking, Stephen, 167“168
ideal rate of, 100
Helman, Bill, 184
interest rates and, 150, 151
Heuristics and Biases (Kahneman,
investment choices and, 200, 201
Gilovich, and Griffin), 25
money illusion, 98“100
HIV problem, 17
money supply and, 102“103,
Home equity, 216
106“108
Hoop Dreams (documentary), 164“165,
multiplication factor system, 96
168“169
predictions of, 105“106
Hormel Foods, 98“99
protection against, 109“113
Housing loans, 128
rates in U.S., 86“87
“Housing Price Bubbles” (Krainer),
real estate and, 200, 201
209
seashell example of, 94“95
How to Profit from the Coming Real
signs of building, 86“87
Estate Bust, 203
stocks and, 112“113, 185, 200, 201
I wages and, 98“100
Influence (Cialdini), 21
Iliad, 13
Information technology revolution,
Income growth, 73
79“80, 83“84, 272“273
Incredible Shrinking Man, 60
Initial public offering (IPO), 246“247
Individual irrationality, 14“15
Instinctual investors, 58“60, 244“245
ancestral traits, 5“6, 234“237,
Insurance companies, stock prices of,
240“241, 267
108“109
conformity needs, 56“58, 283
Interest, compound, 80“81
critical self-examination, 12“14
Interest rates:
emotional response control, 58“60,
bonds and, 141“142, 143, 154“155
243“246
borrowing money and, 158
environment and, 231, 237
condition of, 78
loss aversion, 29“30, 249“250
deficit spending, 77
mathematical calculations, 15“17
government debt and, 146“149
overconfidence, 18“19
inflation-adjusted, 211
understanding of, 56
inflation and, 150, 151
Industrial Revolution, 66, 79
protecting investments from increases
Inflation:
in, 157“158
in the 1970s, 85“86, 102“103
304 Index



individual irrationality, 33
Interest rates (Continued):
loss aversion, 29“30, 249
real estate and, 211“213
United Nations experiment, 253“254
saving money and, 158
Karate Kid (movie), 3“4, 7
trends in, 268
Keller, Mark, 184
In Triumph of the Optimists (Dimson,
Kennedy, John F., 169
Marsh, and Staunton), 167
Keynes, John Maynard, 66, 81, 82, 96,
Investment choices. See also Profitable
129, 183, 273, 286
investing
Kidney transplantation, 87“90
analysis of decisions, 19“20
Kill the messenger tendency, 13
bonds (see Bonds)
King Kong, 196
cash, 3
Korean War P.O.W.s, 21“22
conventional approaches to, 1“2, 10,
Krainer, John, 209
159“164, 266
Kumar, Subodh, 184
currency prices and, 134“135
!Kung San, 239“240, 241, 242
foreign investments, 134“135
mutual funds, 3
L
rational thought and, 4“5
Leahy, Dan, 95
real estate (see Real estate)
Lee, Richard, 240, 241
stocks (see Stock(s))
Leeson, Nick, 30
Treasury bonds (see Treasury bonds)
Leno, Jay, 182
Invisible hand, 38
Leverage, 213“216
IPO (initial public offering), 246“247
Linda-the-bank-teller question, 14“15,
I Really Didn™t Say Everything I Said
236
(Berra), 101
Liu, Ken, 184
Irons, William, 235
Livermore, Jesse, 247
Irrational Exuberance (Shiller), 42

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