Market Sense and Nonsense: How the Markets Really Work (and How They Don't)

Foreword

I was initially flattered when Jack asked me to consider writing the Foreword for his new book. So, at this point, it seems ungrateful for me to start off with a complaint. But here goes. I wish Jack had written this book sooner.

It would have been great to have had it as a resource when I was in MBA school back in the late 1970s. There, I was learning things about the efficient market theory (things that are still taught in MBA school to this day) that made absolutely no sense to me. Well, at least they made no sense if I opened my eyes and observed how the real world appeared to work outside of my business school classroom. I sure wish that back then I’d had Jack’s simple, commonsense explanation and refutation of efficient markets laid out right in front of me to help direct my studies and to put my mind at ease.

It would have been nice as a young portfolio manager to have a better understanding of how to think about portfolio risk in a framework that considered all different aspects of risk, not just the narrow framework that I had been taught in school or the one I used intuitively (a combination of fear of loss and hoping for the best).

I wish I’d had this book to give to my clients to help them judge me and their other managers not just by recent returns, or volatility, or correlation, or drawdowns, or outperformance, but by a longer perspective and deeper understanding of all of those concepts.

I wish, as a business school professor, I could have given this book ...