Review of Bull! : A History of the Boom, 1982-1999: What drove the Breakneck Market--and What Every Investor Needs to Know About Financial Cycles (Hardcover)

Beginning investors are sometimes told a few simple maxims to help them manage their portfolios.Never time the market.Buy and hold.Expect 10% annual return on stocks held for the long run (usually defined as seven to ten years).

Maggie Mahar has done a service to these investors by showing how little evidence there is to support these maxims or, at the least, how easily they can be distorted.She does this by revisiting the last boom and showing it in historical perspective.

Contrary to the conventional wisdom that most index funds will grow 10% annually so long as they are held around ten years, Mahar shows that the U.S. stock market - upon which most index funds closely track - has gone through several periods nearly twenty years long with little to no annual growth.

Contrary to the conventional wisdom that you can't time the market, Mahar says that most savvy investors - including buy-and-hold strategists such as Warren Buffett - do time their investments, and feel no compunction about getting out of a severely over-inflated market.

Mahar's history is also instructive in showing how industry leaders and government officials were complicit in allowing shoddy accounting and other questionable practices to contribute to the breakneck market.Rather than a rational market in which everyone can expect to be a winner given enough time (seven to ten years), "Bull" shows that investors must still exercise caution even when following the few simple investing guidelines that most people do not question.



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