Contents

Acknowledgements

Preface

IKey Concepts

1.Arbitrage, Risk Arbitrage and the Favorite-longshot Bias

2.The Bond Stock Earnings Yield Differential Model

3.Investor Camps

IIHedge Funds, Sovereign Wealth Funds and Other Investment Agglomerations

4.Average Hedge Funds and their Evaluation

5.Incentives and Risk Taking in Hedge Funds

6.Evaluating Superior Hedge Funds

7.Investment in Own-Company Stock

8.Cutting Through the Hype on Sovereign Wealth Funds

9.A New Age for Liquidity

10.Government Owned Pensions: Asset Allocation and Governance Issues

11.Update on Yale's Approach to Endowment Investing

12.A Risk Arbitrage Convergence Trade: The Nikkei Put Warrant Market of 1989-90

13.Kelly Capital Growth Investing

14.InnoALM, the Innovest Austrian Pension Fund Financial Planning Model

IIISeasonal Effects and Other Anomalies

15.Investing in the January Turn-of-the-Year Effect with Index Futures

16.The January Barometer

17.Sell in May and Go Away and the Effect of the Fed

18.60-40 Pension Fund Mixes and Presidential Party Effects

IVVolatility, Correlation and Liquidity

19.Thoughts on the VIX Fear Index

20.Changing Correlations: Rising VIX and Violent Market Moves

VCan We Predict Stock Market Crashes?

21.Stock Market Crashes in 2006-2009: Were We Able to Predict Them?

22.Three Mini Crashes in US and World Equity Markets

23.What Signals Worked and What Did Not, 1980-2009

24.What Signals Worked and What Did Not, 1980-2009, Part II

25.What Signals Worked and What Did Not, 1980-2009, Part III

26.How to Lose Money in Derivatives and Examples of Those Who Did

VIBubbles and Debt

27.Understanding the Financial Markets in the Subprime Era: The 2007/9 Crisis

28.Bubbles

29.China: Navigating the Olympic Risks

30.Turkey's Juggling Act: Can it Live up to Potential?

31.Testing Resiliency: Protest and Natural Disasters

32.It's a Gas, Gas, Gas!

33.Thoughts on the Current Market Environment, Risks and Returns

34.What's Wrong with the US?

35.Investing Around the World

VIIInvesting and Arbitrage in NFL Football and Horse Racing

36.Blunder or Correct Decision? The Belichick Decision to go for it on 4th Down

37.The 2010 and 2011 Super Bowls and the Elo Ranking System

38.Risk Arbitrage in the NFL 2012 Playoffs and the Super Bowl

39.The One That Got Away: The Hitable $2 Million Pick 6 at the Breeders' Cup

40.Two Super Horses

41.Farewell to the Queen and to the Princess of US Thoroughbred Racing

42.The Dr. Z Place and Show Racetrack Betting Systems Past and Present

Bibliography

About the Authors

Index