6 of 9 people found the following review helpful:
A Curate's Egg of a book, 2000-07-11
Haugen's book is pretty good in some parts -- and really bad in others. The efficient markets hypothesis of finance does not hold up if it is interpreted as the joint hypothesis that stocks (and other financial assets) are valued on a discounted dividends (or cash flow or earnings) basis and that prices reflect all relevant information. But if the first part of this proposition fails, the second may still hold. Haugen doesn't seem to realize this, while his conclusions -- giving the subtitle -- rely on the jointness of the hypoothesis strongly. Furthermore, to conclude that since the conditions for a particular derivation fail, the conclusion fails is simply wrong in logic, and that is exactly what Haugen is arguing. The review in not very technical terms of several places where strong "anomalies" make one doubt efficient-market valuation is well done. The analysis of the problems with the market and their consequences is fatuously bad. Instead of giving a coherent argument -- preferably one backed with some research results -- Haugen produces a pathetically silly fantasy tale, and some unsubstantiated conclusions. The bad unfortunately outweighs the good; this book is better avoided!
3 of 5 people found the following review helpful:
Offers a convincing theoretical framework for market vol, 2000-01-20
Although it is a bit strange that he has a story in the middle of the book describing a future political scenario in the world of 24/7 markets, Haugen makes a compelling case for the creation of volatility via the market itself, and not exogenous forces. The reviews above seem to be missing the point a bit. You may feel a bit cheated if you expect all academic writing and come across the story. I think that's what happened above.Either way, CURSE THAT BRIGHTON BELLOW!
3 of 12 people found the following review helpful:
dry, uninteresting, typical college professor type, 1999-10-11
A total waste of money. It is just a pile-up of diagrams that remind you of your Statistics class in college. The writing is incoherent, boring and plain terrible. In the book, there are repeated mockings of college professors which is real dumb. Ironically, Haugen himself is a professor. Hey, I would not take this guy's class.
I serious question the indepence of the two readers that gave the book a 5-star. Are they related in any way to Robert Haugen?
2 of 12 people found the following review helpful:
dry, uninteresting, typical college professor type, 1999-10-11
The book is just a pile-up of diagrams trying to remind you of the Statistics class that you took in college. The writing is very boring, with little self-proclaimed insight. Nothing that you have not already heard of.
If you go to UC Irvine, think twice before you take this guy's class.
5 of 6 people found the following review helpful:
Lit Review-OK; Short Story-Just Plain Awful, Folks!, 1999-07-08
I feel like Graham Chapman's colonel who interrupts a scene and announces, "Stop it! Stop it! This skit has gotten much too silly!"
The Beast is embarrassingly silly. The lit review is fairly well-done, albeit brief and biased. One of Haugen's arugements is that risk disappears when firms use less equity and more debt financing, implying that stock markets are wildly overreactive and excessively volatile. But Haugen ignores the fact that as debt piles up it takes on more of the risk characteristics of equity. So risk does not disappear, it is merely transferred to debt. Haugen also emphasizes that risk is insideous in that it increases the required rate of return that corporations must meet. However, in another book of his, he points out that risk (beta) explains NOTHING about returns. Risk matters in this book. Investors ignore risk in THE NEW FINANCE. Which one is it?
But folks, this sad little book is not all finance. About 90 pages are devoted to a poorly written disutopian short story, pitting a scrappy campaign manager against an investment banking juggernaut. Terrible. Stupid plot. Ridiculous characters. Dialogue that only Ed Wood could love. In one part of the book a group of Ph.D. "efficient market police" scare a snivelling faculty member away from telling the public how dangerous that stock financing really is (as if investors need a Columbia professor to tell them that). Well, the thought police aren't here quite yet. Tenure-track profs are under pressure to get stuff out. All those geeks spinning stock data and crunching numbers are doing it to find interesting results. If they find them-and they didn't cheat to manufacture the numbers-they get published. Period. Hedge funds, wealthy investors and fund managers are trying to take not-so-random walks down high-tech paths trying to gain modest extra returns. How does Haugen explain the cascade of investments books technical analysis, investing the Buffet way, etc., that rely on non-efficient markets?
Bottom line: If you buy this book you deserve to have your money lost. You probably would have blown it on something just as stupid. I myself wish I used my money to buy lotto tickets. So, by all means get it over with...buy this book!