ingredients, 209–10, 214, 235, 262–63, 361
junk bond, 75–76
overvaluation and, 69, 215, 389
pattern of, xxii, 363
potential for, 14, 244–53, 388–90
productivity and, 258–61
profile of, 361, 474
budget deficit. See federal deficit
Buffett, Warren, 21, 25–26, 136–40, 145, 217, 269, 274, 289, 353, 382
bull market cautions, 171–72
on inflation, 47
investment strategy, 35–36, 38–39, 43–44, 62, 407n.21
on stock options, 135, 136, 138–39, 140, 142, 144
on stock overvaluation (1987), 62
on U.S. trade deficit, 394–95
warning on 2004 market investment, 388–89
Buffett Partnership, 36, 38
bull market
buying/selling during, 31, 35, 173–74
cyclical, 11, 366
cyclical vs. lasting, 391
ground-floor buyers into, 44–45
index fund timing and, 209
interest rates and, 85, 104, 114, 392
investor confidence underlying, 31, 243
investor sentiment (2004), 388–91
limits of financial memory and, 12–13
losses at end of, 27–29
patterns, 4–9, 16, 365
proportionate bear market following, 361, 364
psychological factor, 4, 15–18, 27, 262–63, 430n.3
short sellers and, 55
tangible purchases and, 31, 36
three articles of faith, 227
See also bubble; market cycles
bull market of 1954–68, 35–47, 69, 358, 365, 408n.26
Dow Jones peaks and falls, 39, 40, 41, 43
hottest stocks of, 40–43, 45, 210, 406n.18
individual investors and, 51
See also crash of 1973–74
bull market of 1982–99. See Great Bull Market of 1982–99
bull market of 2003–04, 387–92
bearish predictions for, 395–96
consumer debt and, 392–94
quality of, 390
Bunt, James, 133
Burkhead, J. Gary, 413n.21
Burrough, Bryan, 53, 76
Bush, George H. W., 85, 87, 93–95, 155, 320–21
Bush, George W., 87, 265, 328, 329–30, 343–44
debt-based economy, 392–94
2004 presidential election and, 395, 396
tax cuts, 328, 329, 392
business journalism. See media
Business Week, 87, 97, 120, 240, 293, 305, 346, 410n.14
CFO poll results, 269–70, 271
list of nonexercised stock options, 428–29n.42
on New Economy, 167, 254, 255
on stock market’s death knell, 45–46, 408nn.25, 26
buy-and-hold strategy, 21–23, 41, 227, 353, 359–61, 366
actual outcomes vs. popular wisdom, 22, 27–29, 31, 42, 45, 107, 120–21, 171, 191, 215, 310, 359–60
Buffett linked with, 35
inflation and, 49
larger market cycles and, 354
market cycle timing theory vs., 7
mutual fund investor and, 218, 294, 302
“Nifty Fifty” and, 41, 302, 406n.18
as Rukeyser creed, 310
stock losses and, 339
stock-to-bond total return ratio, 356
2004 market and, 391
value investor and, 213
buybacks. See share buybacks
Buyer, Lise, 196, 201, 293, 294
buyouts. See leveraged buyouts
Cadette, Walter M., 273
Calabrese, Michael, 147
call options, 138–39, 166, 278–79, 425n.28
Calloway, Wayne, 145, 428n.42
Campbell, John, 245, 246, 247
capital
cheapness of, 329, 361
conservation during bear market, 367
IPOs’ misallocation of, 24–25
leveraged buyout effects on, 52, 74
source in 1990s, 252
stock options’ diversion from, 133, 139–40
capital gains, 6, 59, 360, 378, 379, 381, 383
Capital Ideas (Bernstein), 68
capital investment, 59, 99, 330, 378
consumer spending and, 394
dividends and, 379, 381
interest rates and, 85, 328–29
slowdown of, 362
technology stock boom and, 258, 259, 361–62
See also excess capacity
capitalism, 14–15, 19, 26, 90–91, 95
Carhart, Mark M., 186, 438n.28
Case, Steve, 195, 197, 200, 201, 306
cash assets, 388–89
cash flow, 57, 177, 330, 379, 380
AOL statement, 457–58n.7
casinos, 211
Cassidy, John, 91, 351, 352
Cassidy, Sharon, 27–28, 211
Cassidy, Shawn, 122
CBOE (Chicago Board Options Exchange), 64
CDs (certificates of deposit), 59, 114, 115, 391
Centennial Technologies, 243
CEOs, 343–45
compensation packages, 124–27, 134, 137–40, 276–79, 320, 343–44, 350
financial malfeasance, 343–44
government contacts, 129
Greenspan’s policies and, 328
insider selling, 317–24
investors’ anger at, 343
media and, 157–58, 168, 180
projected earnings, 145, 207
value of nonexercised stock options, 428–29n.42
certainty, probability vs., 283–85, 369
CFO finance misrepresentation poll, 269–70
Chambers, John, 57, 207
Chanos, Jim, 53–58, 75, 76–77, 123, 146–47, 269, 271, 272, 278
accounting reforms skepticism, 389–90
Charles Schwab, 72, 164, 257, 289, 314, 340
Chesterton, G. K., 284
Chicago Board Options Exchange, 64
China, 259, 355, 372, 374, 375, 377
Churchill, Winston, 49–60
CIBC Oppenheimer, xvii, xviii, xx, 289, 291–93, 398n.3
Ciesielski, Jack, 276
Cisco Systems, 26, 28, 41, 54, 57, 99, 205, 210, 296, 404n.21
accounting, 182, 207, 272–73, 281
as momentum fund pick, 205, 206–8, 234
nonexercised stock options, 277
stock performance, 259, 301, 327, 387
ubiquity in mutual funds, 302, 305
Citicorp, 94, 95, 127, 244
Citigroup, 277, 327
Citron, Robert, 20
class-action suits, 146–47, 198
Clayton, Joseph, 320
Clinton, Bill, 19, 87–88, 96, 128, 142, 148–49, 248, 323, 418n.45
Clinton, Hillary Rodham, 96
Clipper Fund, 113, 219
CNBC, 21, 30, 31, 72, 87, 153, 155–65, 168, 170, 292, 310, 338, 346, 354, 432–33n.22, 433n.32
analyst guests, xvii, 8, 10, 297, 304
“beat the numbers” emphasis, 164–65
as CEO showcase, 157–58, 180
GE ownership of, 155, 414n.24
on individual investor culpability, 30
Rukeyser and, 342
CNBC
viewer following, 17, 18, 19, 175, 289, 404n.31
CNN, 11, 304, 306, 310, 413n.18
CNNfn, 154
Coca-Cola, 145, 210, 214, 277, 428n.42
Cohen, Abby Joseph, 81–87, 95–97, 167, 190, 239–45, 271, 298–99, 300, 322
bullishness of, 8, 9, 84, 86–87, 239–40, 243, 245, 305, 342
Cohen, Bruno, 165, 433n.32, 434n.39
Cohen, David, 83–84
Cohen, Jonathan, 292, 293, 294
Colamosca, Anne, 103, 419n.5
Coleman, Alan B., 46
Colgate-Palmolive, 46, 429n.42
commissions, 182–83, 295, 358
commodities,
354, 372–75, 376, 377, 396
market cycles (1937–99), 373
near all-time low, 372, 480
Compaq, 145, 182, 428n.42
compounding, 367, 381–82, 383
Computer Assoc. Intl., 428n.42
computers, 182, 322–23
price cuts, 25, 258, 259, 278
productivity and, 255–57
See also Internet
Condit, Phil, 328
Congress, 24, 25, 30, 91, 94, 123–49, 302
CEO excesses and, 343
Enron and, 123, 146
Great Bull Market aftermath and, 343–44
Greenspan testimony, 251, 329, 450n.28
Safe Harbor Provision, 146–49
Consumer Price Index, 19, 47, 92, 354, 396, 452n.19
consumers, 21, 25, 29
AOL advertising and, 199–200
debt increase, 330, 362, 392–94, 396
disinflation era and, 93, 260
consumer spending, 36, 93, 256, 257, 322, 362
as Bush economic recovery basis, 392–94, 396
consumer stocks, 205, 226
conventional wisdom, 191–92, 371, 382
on bear market beginning, 326
on bull market, 227, 353–54
on “creative” accounting, 273
on index funds, 209
on stock outperformance of bonds, 357–59
See also buy-and-hold strategy
Cook, Lodwrick, 320–21
corporate corruption. See fraud and corruption corporate finances, 146–49
balance sheets, 176, 177, 243
bull market investments, 51
Bush reform speech, 343–44
capital spending and, 59, 328–29
debt defaults, 462n.36
debt increase, 330
debt of 1980s, 85
disclosure legislation, 343
dividend payments and, 378–81
401(k)s and, 23, 102–8, 340, 422n.44
fundamental measures of, 69
high interest rates and, 85
high-yield junk bonds and, 52
inflation and, 47, 51–52
IPO frenzy and, 50
leveraged buyouts and, 52–53
mergers and, 53
misrepresentations of, 269–74, 279–82
pension plan rethinking, 102, 110, 340
“pricing power” loss, 260
profits reports, 257–58
research on, 55, 56, 177–81
stock valuation and, 13, 21
takeovers and, 51–52, 59
Washington lobbyists and, 121
See also accounting; CEOs; earnings; share buybacks; stock options
Corrections Corporation of America, 205
Corzine, Jon, 239, 279
Council of Economic Advisors, 88, 91
Council of Institutional Investors, 138, 343
Countrywide Credit, 277
Cox, Christopher, 148
CPI. See Consumer Price Index
Cramer, James, 165–67, 203–7, 229, 349
crash of 1929, 35, 89, 115, 365
actual dates of, 16
bear market following, 69
congressional investigation, 30
crash of 1973–74 rivaling, 39
giant rally following, 390
human nature and, 16
unheeded warnings, 12, 401n.23
crash of 1962, 36, 69
crash of 1970, 390–91
crash of 1973–74, 3, 7, 9, 16, 39–46, 62, 163, 316
bear market following, 69, 364
as buying opportunity, 43–44, 407–8n.23
crash of 2000 compared with, 326–27
as deterrent to new stock investors, 45–46
Greenspan’s bullishness and, 390–91
“Nifty Fifty” and, 40–43
crash of 1987, 48, 60, 61–77, 84–85, 224, 249, 367
background, 61–64, 390
bargain buyers following, 67, 72, 77
explanations of, 67–70, 92
Greenspan and, 92
investor confidence and, 77, 86, 116
predictors, 62–63, 84, 240, 355, 412n.9, 413n.18
revisionist view of, 72
crash of 2000, 326–27, 358
blame and, 344, 345–46
credit
Greenspan policies, 322–23
junk bonds and, 52–53
as market mania ingredient, 262
short selling and, 55
vendor, 272–73, 280
warnings of, 64
See also debt; interest rates credit cards, 262
Credit Suisse First Boston, xix, 98–99, 293, 341
CREF. See TIAA–CREF
Crystal, Graef, 350
CS First Boston Corp., 120
currency devaluation, 259–60, 394, 395, 396
currency investment, 355, 375–76, 395, 396
Currier, Chet, 339
cycle theory, 4–7. See also market cycles
D’Amato, Alfonse, 131, 147–48
Davis, Christopher, 458–59n.20
Davis, L. J., 413n.18
Davis, Ned, 230, 364, 366
day trading, 4, 24
Dean Witter, 43
debt, 461–62n.36
as Bush economic recovery basis, 392–96
consumer, 330, 362, 392–94
corporate, 380, 462n.36
home equity loans, 393
junk bonds and, 75
leveraged buyouts and, 54, 74
low interest rates and, 392
real estate, 376, 393
share buybacks, 133, 178, 277
steep interest rates and, 52, 85