Credit card debt, 273

Cripps, Richard, 184

Critical self-examination, 12-14

Cuban Missile Crisis, 169

Currency prices. See also Dollar(s)

devaluation, 119-120, 122-125

inflation and, 121-122

investment return and, 134-135

loan default and, 129-130

nominal exchange rate, 121-122

real exchange rate, 121

setting of, 117-118

stocks and, 185-186 Current account:

of Canada, 123-124, 125

deficit in, 116-119, 120, 125-127

defined, 116

imbalances, 116-119

of Mexico, 124-125

surplus, 119

Darwin, Charles, 80-81 Davis, Gray, 76

Death of Equities (BusinessWeek), 45-46

Death or Glory (DoG), 257 DeBondt, Werner, 48-19 Debt:

government (see Government debt)

personal, 271, 273-274 Decision-making skills, 4, 14-15 Deficit spending, 69-70, 71, 77 Deflation, 98-99, 106, 112-113 Detroit Pistons, 230-231 Devaluation of money, 119-120,

122-125 DeVore, Irven, 240 Dickson, Chip, 184 Dirksen, Everett, 144 Dollar-cost averaging, 250-252 Dollar(s). See also Money

creation of, 129-130

value against Chinese currency, 133

value against euro, 130-132

value against Japanese yen, 133 value linked to gold, 93-94 value of, 119-120, 122-125, 133-135, 186

Dopamine, 279, 284 Double Down (Barthelme and

Barthelme), 280 Dow Jones Industrial Average:

before 1987 crash, 181, 182

decline of, 273

Great Depression, 163

1987 stock market crash, 42

over time, 45-46 Dow Jones Newswire, 184 Drug addiction, 278-279 Dutch tulipmania, 41-42, 52

Eals, Marion, 241

East German stock investments, 165-166, 171

The Economic Possibilities of Our Grandchildren (Keynes), 66, 82, 83

Economic growth:

compared to stock revenues, 179-182 consumer spending, 71, 72-74 deficit spending, 69-70, 71, 77 exported goods, 75-76 Federal Reserve monetary policy, 70-71

government spending, 71-72, 76-77

key to, 83-84

longer-term trends, 77-79

productivity of U.S. companies, 79-84

savings rate, personal, 71, 73-74 Economic wealth, 82-83 Efficient market hypothesis, 38-40, 47-48

contradictions to, 49-50

dogma of, 51-52

luck of investors performance, 50-51 stock prices, 40 winner and loser study, 48-49 Eisenhower, Dwight, 170

Elasticity, concept of, 205-206

EMC, 43, 54-55, 285

Emotional intelligence (EQ), 286-287

Emotion and investing:

emotional mood swings, 175-176 emotional response control, 58-60,

243-246, 284-285 self-control issues, 33-34, 259-262 sentiment as predictor of future returns, 45-46

Employment rates, 187-189 Envy, 275-277

Equity-risk premium, 139-140 Etoys, 56, 58, 246-247, 251 Euro, 119-120, 130-132 Exchange rates. See currency prices Exported goods, 75-76

Fallows, James, 195

Favale, Vinnie, 28-29

Federal Reserve, 70-71, 103-105

Fed model, 171-174, 176-177

Fehr, Ernst, 100

Fei, 92-93

Ferrigno, Lou, 177

Fiat money, 93-94

Financial mast-strapping, 260-262

Financial news and information, 252-254

Financial plans, 285-286

Financial risk, 268. See also Low-risk investments amount of risk, choosing, 279-282 productivity as cure, 273-275 risk-reduction, 269-271, 282 stocks and, 279-282

First Contact (movie), 94

Fisher, Irving, 153, 154

Fixed-rate loans, 110, 221-223, 271

Foley, Jan, 131

Fooled by Randomness (Taleb), 170, 255

Foraging societies, 240-241 Ford, Gerald, 20, 86

Foreign investments, 134-135, 271

Foundation series, 271

Four new horsemen of the NASDAQ, 43

Freud, Anna, 21

Freud, Sigmund, 20, 21

Friedman, Milton, 87, 91, 101-102

Fuller, Russell, 51

Full Metal Jacket (movie), 238

Gage, Phineas, 24-25 Galbraith, John Kenneth, 176 Galbraith, Steve, 184 German economy:

growth of, 75

inflation, 96-97, 102, 106 German unemployment rate, 75 Gigerenzer, Gerd, 236-237 Glengarry Glen Ross (movie), 246-247 The Godfather: Part II, 55 Goes to eleven, 156-157 Gold, 92

dollar value linked to, 93-94

investment in, 256-257

prices, 54, 161-162

return on investment, 171, 230 Goldilocks view of inflation, 97-100,

108-109, 113 Goleman, Dan, 286-287 Gore, Al, 146

Government bonds. See Bonds Government debt, 78-79, 126-128

interest rates and, 146-149

problems with, 127-130

productivity and, 274-275

projection of, 144-146, 276

saving money and, 145

social security fund and, 146

trends in, 268

U.S. economy and, 146-148

U.S. overseas assets, 126 Government spending, 71-72, 76-77 The Graduate (movie), 229 The Great Crash (Galbraith), 176

Great Depression, 118, 163, 216 Greenspan, Alan, 42, 71, 106, 149, 222

Gross, Bill, 273

Gross domestic product (GDP),

146-148 Guth, Werner, 27

Hare, Brian, 233

Hawking, Stephen, 167-168

Helman, Bill, 184

Heuristics and Biases (Kahneman,

Gilovich, and Griffin), 25 HIV problem, 17 Home equity, 216

Hoop Dreams (documentary), 164-165,

168-169 Hormel Foods, 98-99 Housing loans, 128 Housing Price Bubbles (Krainer),

How to Profit from the Coming Real Estate Bust, 203

Iliad, 13

Income growth, 73

Incredible Shrinking Man, 60

Individual irrationality, 14-15 ancestral traits, 5-6, 234-237,

240-241, 267 conformity needs, 56-58, 283 critical self-examination, 12-14 emotional response control, 58-60,

243-246 environment and, 231, 237 loss aversion, 29-30, 249-250 mathematical calculations, 15-17 overconfidence, 18-19 understanding of, 56

Industrial Revolution, 66, 79

Inflation:

in the 1970s, 85-86, 102-103

bonds and, 150, 151, 200, 201 causes of, 101-103 currency prices and, 121-122 deferred payment and, 96 defined, 95 deflation, 98-99, 106 effects of, 97

in Germany, 96-97, 102, 106 Goldilocks view of, 97-100, 108-109, 113

hyperinflation, 96-97, 102

ideal rate of, 100

interest rates and, 150, 151

investment choices and, 200, 201

money illusion, 98-100

money supply and, 102-103, 106-108

multiplication factor system, 96

predictions of, 105-106

protection against, 109-113

rates in U.S., 86-87

real estate and, 200, 201

seashell example of, 94-95

signs of building, 86-87

stocks and, 112-113, 185, 200, 201

wages and, 98-100 Influence (Cialdini), 21 Information technology revolution,

79-80, 83-84, 272-273 Initial public offering (IPO), 246-247 Instinctual investors, 58-60, 244-245 Insurance companies, stock prices of,

108-109 Interest, compound, 80-81 Interest rates:

bonds and, 141-142, 143, 154-155

borrowing money and, 158

condition of, 78

deficit spending, 77

government debt and, 146-149

inflation-adjusted, 211

inflation and, 150, 151

protecting investments from increases in, 157-158