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When Markets Collide: Investment Strategies for the Age of Global Economic Change | 
 enlarge | Author: Mohamed El-erian
Publisher: McGraw-Hill
Category: Book
List Price: $27.95
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Rating:  38 reviews
Sales Rank: 1070
Media: Hardcover
Edition: 1
Number Of Items: 1
Pages: 304
Shipping Weight (lbs): 1.5
Dimensions (in): 9.1 x 6.4 x 1.3
ISBN: 0071592814
Dewey Decimal Number: 381.101
EAN: 9780071592819
ASIN: 0071592814
Publication Date: May 23, 2008
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Product Description
"ONE OF THE SMARTEST INVESTORS ON THE PLANET."--MONEY MAGAZINE. . �This book is an essential read for those who. wish to understand the modern world of investing.�.
�Alan Greenspan . . . Winner of the 2008 Financial Times and Goldman Sachs Business Book of the Year Award When Markets Collide is a timely alert to the fundamental changes taking place in today's global economic and financial systems--and a call to action for investors who may fall victim to misinterpreting important signals. While some have tended to view asset class mispricings as mere �noise,� this compelling book shows why they are important signals of opportunities and risks that will shape the market for years to come. One of today's most respected names in finance, Mohamed El-Erian puts recent events in their proper context, giving you the tools that can help you interpret the markets, benefit from global economic change, and navigate the risks. . . The world economy is in the midst of a series of hand-offs. Global growth is now being heavily influenced by nations that previously had little or no systemic influence. Former debtor nations are building unforeseen wealth and, thus, enjoying unprecedented influence and facing unusual challenges. And new derivative products have changed the behavior of many market segments and players. Yet, despite all these changes, the system's infrastructure is yet to be upgraded to reflect the realities of today's and tomorrow's world. El-Erian investigates the underlying drivers of global change to shed light on how you should: . . . . - Think about the new opportunities and risks.
- Construct an appropriately diversified and internationalized portfolio.
- Protect your portfolio against new sources of systemic risk.
- Best think about the impact of central banks and financial policies around the world
. . Offering up predictions of future developments, El-Erian directs his focus to help you capitalize on the new financial landscape, while limiting exposure to new risk configurations. . . When Markets Collide is a unique collection of books for investors and policy makers around the world. In addition to providing a thorough analysis and clear perspective of recent events, it lays down a detailed map for navigating your way through an otherwise perplexing new economic landscape. .
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| Customer Reviews: Read 33 more reviews...
 Timely Book on The Impact of Global Economic Change on Investing June 15, 2008
100 out of 116 found this review helpful
If you find the present global economic situation to be confusing and filled with conflicting signals and noise, this excellent book by Mohamed El-Erian, the CEO of PIMCO and the former President of the Harvard Management Company where he managed Harvard's $35 billion endowment, should be on your reading list.
El-Erian brings a unique perspective to the task of separating the signal from the noise in today's volatile global markets. Having spent 15 years at the International Monetary Fund and the rest of his career in the trenches in emerging market research and investment at leading investment banks, he has a deep understanding of both the public policy side and the realities of global investing.
His premise could not be more timely: Global markets are undergoing profound changes and the present turmoil is neither the beginning nor the end of the transformation that is shaking up investors around the world. This bumpy process is nothing less than the collision of markets in which the markets of yesterday collide with those of tomorrow
The book offers analytical anchors for identifying the key elements of what, for some, have become key drivers in an unusually fluid environment. In addition to offering targeted, well written, explanations of some of the key sources of confusion and dislocation (U.S. national debt, new sovereign wealth funds and emerging, developing countries now funding the debt of the developed nations), El-Erian also provides some invaluable advice for personal investors.
Given his contention that most U.S. investors have not fully grasped the impact of the changes going on in global markets and the impact of higher commodity prices and shift to accelerating inflationary trends around the world, he provides a new sample asset allocation model for correcting some of the imbalances in most U.S. investors' portfolios.
His asset allocation table on pg. 198 provides an illustrative neutral asset mix for long term investors that is well worth the cover price of this book and was featured recently in an excellent article and interview in Barron's in the June 2, 2008 issue.
His writing style is fluid and command of the material impressive. Like most great authors and thinkers, he will have you challenging your present views and investment positions. This book is an outstanding companion to Unconventional Success: A Fundamental Approach to Personal Investment by David Swensen on the personal investment front and The Age of Turbulence: Adventures in a New World by Alan Greenspan on the public policy front.
In addition to raising the big issues, El-Erian provides a clear action plan for both investors and policy makers, a truly outstanding achievement in a field where leaders are too often focused on selling investment products rather than educating the investment public on the changes in global economic conditions.
Volitile, yes. Immeasurable, no. July 1, 2008
27 out of 36 found this review helpful
I would highly recommend this book as a single source for a variety of key trends that, until El-Erian, no author seemed to be able to put together. However, the broad forecasts of this book should be combined with practical measurement and forecasting methods such as those described in How to Measure Anything: Finding the Value of "Intangibles" in Business by Douglas Hubbard.
El-Erian takes a Modern Portfolio Theory approach to virtually any investment portfolio and he gives specific proposals for how to balance your investments given the inevitable trends he sees. Hubbard's quantitative methods applied to El-Erian's vision of the future should make a powerful forecasting tool.
When Markets Collide is more focused and clear than books like Megatrends 2010: The Rise of Conscious Capitalism, provides more practical instructions for the investor, and seems to lack some of the more embarrasing technical errors. I also like that the dynamics El-Erian sees are more persistent and will not be as quickly dated as many of the books that depend entirely on predictions for the next few years.
Emerging economies to make up US growth slack December 3, 2008
0 out of 1 found this review helpful
1. Emerging markets are a key to understanding the global economic and financial markets. Sovereign wealth funds will provide a new pool of money. Directives have helped open emerging markets and allow monetary investment not before possible.
2. Emerging economies will have a growing influence on the global economy's growth rate.
3. For several years emerging Asian economies have account for more global GDP growth than America has. China and India consumer spending is increasing and contribute to global GDP.
4. Purchase power parity is a unit of measure that eschews the market exchange rate for a conversion based on what is need to buy the same amount of goods and services in each country. When measured using purchasing power parity, China and India contribute more to global growth in 2007 than did the US, UK, and Japan. China and India are moving into a new territory where they are able to internal consume and invest.
5. China will increasingly find that it's growth will be driving by internal demand rather than external markets. Policy will shift in favor of the consumer and help alleviate protectionist pressures coming from outside, especially from the US which some have label China as a currency manipulator.
6. Developing countries will increasingly step up as significant and sustainable sources of global growth
7. Global economic growth will gradually reduce the world's sensitivity to variations in US growth performance
8. Emerging economies will result in a greater emphasis on domestic components of demand. The global economy will be sustainable because a number of emerging economies are coming online resistant to US down turns.
9. Emerging economies have recycled their trade economies surplus back into US treasury instruments, mortgages, and corporate bonds. Exchange rates have remained stable. The big players are the Middle East oil producers and Asian producers. However, the imbalances are clearly unsustainable.
10. As emerging economies gradually shift their primary focus from the producer to the consumer, the rate of growth from imports in these countries will increase over that of the exports. Over the next decade many emerging economies will shift from being export machines to being consumers.
11. Emerging economies will absorb surplus labor from traditional sectors and traditional sectors will shift the focus away from incremental job creation to human capital accumulation and knowledge-based activities.
12. Emerging market export growth grew from 10 percent at the beginning of the decade to 17 percent by 2006.
13. The US in particular will be able to gradually and partially replace its reliance on the overstretched consumers with a new reliance on meeting the growing demand impulses coming from the rest of the world.
14. Global productivity gains put intense competitive pressures on manufacturers and service providers to reduce costs. Dis-inflationary impact is slowly dissipating and key emerging economies are now exhibiting a gradual increase in wages and partial exhaustion of high-productivity, low-cost labor.
15. A billion workers moving into the market place reduce world wages, inflation, inflation expectations, and interest rates.
16. Surging economies have been an important factor behind the surge in commodity prices.
17. Chinese consumption of oil was 7.1 mbd in 2006 and by 2030, oil demand 16.5 mbd and India demand will reach 6.5 mbd.
18. Emerging economies that have high growth rates are even larger users of natural resources. The impact of this extra demand will not be offset by the reduced consumption in industrial countries because emerging economies are less efficient user of natural resources.
19. Physical demand for commodities will be supplemented by financial demand.
20. Accumulative earnings from Middle East oil export for 2004 through 2008 will approach $2 trillion, 45 percent is saved, adding to large holdings of international reserves.
21. Emerging economies investment in US government papers puts downward pressure on US interest rates.
22. As reserve accumulation persists contributes to greater inflationary pressure and appreciation in exchange rates. Reserve accumulation makes exports more expensive. Authorities look for ways to sterilize large capital inflows through purchases of US government paper or outsourcing the management to Bank of central banks (BIS). Saves are pulled out and liquidity of the surplus is mopped up. The interest payments on the debt issues to sterilize the inflows far exceed that earned on the reserve (negative carry).
23. Countries can buy back their debt and extinguish debt in foreign currency that trades at higher yields than what was earned on the investment of the reserves.
24. Some countries are starting to setup Sovereign wealth funds (SWF). SWF of oil producers have been exploring opportunities in the Middle East and North Africa, India, Pakistan, and the Far East. Chinese entities have been purchasing investments in Africa and Latin America. SWFs operating cross borders and long term gives them value orientation.
25. Creditor countries must recognize that the shift in external payments has a permanency to it. Emerging countries must encourage domestic components of demand along with the external components.
26. Bond markets and US government bonds are facing the prospect of lower allocation of sovereign investments. The declining share will reflect a natural diversification in the asset allocation of the SWFs. While equity markets, real estate will likely benefit from larger allocations of bonds.
27. Derivative products have enabled a far greater degree of linkage across markets, at any time. BIS estimates, end of Jun 2007, the derivatives market to be $516 trillion. Credit Default swaps have shown the fastest growth. The visible revolution of derivatives has been the mortgage products.
Thoughtful and forward-looking August 27, 2008
3 out of 6 found this review helpful
I think this is an excellent book that makes you think. Mr. El-Erian certainly has a very deep understanding of the current economic and financial environment and is able to convey much of this understanding to his readers. I enjoyed the book very much.
Excellent 5- to 10-year Outlook September 1, 2008
3 out of 6 found this review helpful
It's hard to imagine someone having more cred's than Mohamed El-Erian or having a better understanding of trends in the global economy, and as articulate. For those reasons alone, it's hard for investors, large or small, to justify NOT spending a little with with Mr. El-Erain. This book is a global financial compass, not a recommendation on specific companies to invest in or run from. When Markets Collide gives the reader a frank overview of the forces behind macro global financial trends (i.e, reality check), where those financial trends are almost certainly taking us in the next 5 to 10 years, and what those trends mean for investors that are in the market for the long-term.
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