Cocktail Economics: Discovering Investment Truths from Everyday Conversations

Foreword xii Preface xvii Introduction: The Above-Average Opportunity xxi Chapter 1: The Buy-and-Hold Connection: Investing Fundamentals, Courtesy of the American Homeowner, the American Dream--or Reality? 1 Chapter 2: Leaping the Transaction-Cost Hurdle: Sometimes It's Easy, Other Times It's Not 19 Chapter 3: Dressing Appropriately for the Stock Market: The Potential Payoffs of a Switching Strategy 31 Chapter 4: Catch Elasticity If You Can: An Introduction to Industry Behavior 47 Chapter 5: Putting High-Beta to Work: Industry-Based Portfolio Strategies 67 Chapter 6: California Is a Country: An Introduction to the Location Effect 83 Chapter 7: !And France Is a State: How to Invest Internationally in the Age of Globalization 99 Chapter 8: Pipelines to Our Investment Returns: How We Get What We Want, in the Amount We Want, and When We Want It 113 Chapter 9: Who Are You? Investor Profiles and the Case for Asset Allocation 131 Chapter 10: Your Benchmark Portfolio...and Beyond 145 Chapter 11: Turning Smoke into Signals: How to Make the Most Out of Price Data 157 Chapter 12: Making Hay While the Sun Shines: The Case for Predicting, Forecasting, and Timing 173 Chapter 13: The Fight Is On: How to Invest Properly Relative to Regulations, Inflation, and Taxation 195 Chapter 14: Ending the Never-Ending Debate: Active vs. Passive Investing and Why You Can Take Both Sides 217 Chapter 15: A Rational Walk Down Wall Street: Darting Between Passive and Active When the Odds Are in Your Favor 233 Chapter 16: Alpha Bets: The Case for Hedge Funds and a Greek Letter You'll Want in Your Portfolio 247 Chapter 17: Tilting Toward Success: A Step-by-Step Guide to Above-Average Asset Allocation 265 Index 291

VICTOR A. CANTO is Chairman and Founder of La Jolla Economics, an economic consulting firm located in La Jolla, California. He served as tenured Associate Professor of Finance and Business Economics at the University of Southern California (USC), and as Visiting Professor at both the Universidad Central del Este (Dominican Republic) and UCLA. Dr. Canto has been published in The Wall Street Journal and Investor's Business Daily, and in many leading economic journals, including Economic Inquiry, Journal of Macroeconomics, The International Journal, Journal of Business and Economic Statistics, The Southern Economic Journal, Applied Economics, Weltwirstchaftliches Archiv, The CATO Journal, Public Finance, and The Journal of International Money and Finance. His series on portfolio strategy appeared in the Financial Analysts Journal. He holds a M.A. and Ph.D. in Economics from the University of Chicago (1974, 1977).