Preface ix

Acknowledgments xix

1 Question One: What Do You Believe That Is Actually False? 1

If You Knew It Was Wrong, You Wouldn’t Believe It 1

The Mythological Correlation 8

Always Look at It Differently 15

When You Are Really, Really Wrong 21

2 Question Two: What Can You Fathom That Others Find Unfathomable? 31

Fathoming the Unfathomable 31

Ignore the Rock in the Bushes 32

Discounting the Media Machine and Advanced Fad Avoidance 33

The Shocking Truth About Yield Curves 38

What the Yield Curve Is Trying to Tell You 49

The Presidential Term Cycle 57

3 Question Three: What the Heck Is My?Brain Doing to Blindside Me Now? 67

It’s Not Your Fault-Blame Evolution 67

Cracking the Stone Age Code-Pride and Regret 72

The Great Humiliator’s Favorite Tricks 85

Get Your Head Out of the Cave 87

4 Capital Markets Technology 95

Building and Putting Capital Markets Technology Into Practice 95

It’s Good While It Lasts 100

Forecast With Accuracy, Not Like a Professional 105

Better Living Through Global Benchmarking 113

5 When There’s No There, There! 131

Johns Hopkins, My Grampa, Life Lessons and Pulling a Gertrude 131

In the Center Ring-Oil Versus Stocks 136

Sell in May Because the January Effect Will Dampen Your Santa Claus Rally Unless There Is a Witching Effect 148

6 No, It’s Just The Opposite 155

When You Are Wrong-Really, Really, Really Wrong 155

Multiplier Effects and the Heroin-Addicted iPod Borrower 163

Let’s Trade This Defi cit for That One 170

The New Gold Standard 175

7 Shocking But True 185

Supply and Demand . . . and That’s It 185

Weak Dollar, Strong Dollar-What Does It Matter? 200

8 The Great Humiliator and Your Stone Age Brain 213

That Predictable Market 213

Anatomy of a Bubble 221

Some Basic Bear Rules 229

What Causes a Bear Market? 244

9 Putting It All Together 251

Stick With Your Strategy and Stick It to Him 251

Four Rules That Count 257

Finally! How to Pick Stocks That Only Win 274

When the Heck Do You Sell? 281

Conclusion: Time to Say Goodbye 289

Transformationalism 290

Appendix A: Causal Correlations and the Correlation Coefficient 295

Appendix B: News You Can’t Use 299

Appendix C: Greater Fools 301

Appendix D: I Hate Funds 303

Appendix E: Annualized Versus Average 307

Appendix F: The Wizard of Oz and an OZ of Gold 309

Appendix G: 1980 Revisited 313

Appendix H: Popular But Problematic 317

Appendix I: Covered Calls-Covering What? 321

Notes 323

About the Authors 329

Index 331