Table Of ContentAcknowledgments ix Introduction 1 1 New Steps 11 2 More Than Stocks, More Than Bonds 33 3 What Can Go Wrong 53 4 Reading the Federal Reserve 97 5 Prices and the Fed 125 6 McCulley 137 7 Speaking Of . . . 157 8 Driving Your Portfolio 185 Notes 223 Index 237 About the Authors 243
SynopsisPraise for Your Financial Edge "Paul McCulley is the man to heed. His knowledge of financial markets runs deep, and his experience has been the best. Beyond all his financial and economic wisdom, he is a human being with inborn instincts of kindness and thoughtfulness-attributes that bring to the reader something richer than just hard facts and sage advice. Jonathan Fuerbringer is the perfect partner for this project, a master of lucidity and a longtime observer of the best and the worst habits of investors." -Peter Bernstein, bestselling author of Against the Gods "Paul McCulley's insightful observations on the economy and financial markets are key inputs to our investment thinking. This book provides analytical tools and actionable advice that can greatly improve your ability to navigate today's complex financial environment. Learn from a master (and maybe even future Federal Reserve Board member) and become a better investor." -Bill Miller, Chairman and Chief Investment Officer, Legg Mason Capital Management "Paul McCulley is just the man to bring 'that ole-time religion' of economics into the new age of investing and help the reader to make coherent sense of just what is going on here. I should know...I listen to his counsel every day here at PIMCO, and for anyone who lacks a key to our door, this is the next best thing Profit by the prophet-and yes-enjoy." -William H. Gross, Managing Director, PIMCO "In this highly readable book, McCulley and Fuerbringer provide valuable insights, including how the world of policy making impacts investment decisions. Their entertaining and thoughtful analysis is accompanied by a series of penetrating real-life examples that demonstrate the choices facing investors as they seek to maximize returns and minimize risk. With its wisdom and unique perspective, this book will be of interest to both institutional investors and policymakers." -Dr. Mohamed A. El-Erian, President and CEO, Harvard Management Company, member of the faculty, Harvard Business School, and Deputy Treasurer, Harvard University "There's a reason Paul McCulley is a favorite among financial pros and journalists all over the world. He anticipates investment trends before they happen and helps both professional and amateur investors stay ahead of the curve. This is a must-read book for anyone who wants to build and protect their portfolio in the risky decades ahead." -Consuelo Mack, Anchor and Managing Editor, Consuelo Mack WealthTrack, Practical advice for profiting during rapidly shifting economic times In order to make sense of today s shifting markets, investors must understand the dynamics of these markets and learn how to evaluate which investments best meet their needs. Your Financial Edge can show readers how to do this and much more., Praise for Your Financial Edge "Paul McCulley is the man to heed. His knowledge of financial markets runs deep, and his experience has been the best. Beyond all his financial and economic wisdom, he is a human being with inborn instincts of kindness and thoughtfulness attributes that bring to the reader something richer than just hard facts and sage advice. Jonathan Fuerbringer is the perfect partner for this project, a master of lucidity and a longtime observer of the best and the worst habits of investors." Peter Bernstein, bestselling author of Against the Gods "Paul McCulleys insightful observations on the economy and financial markets are key inputs to our investment thinking. This book provides analytical tools and actionable advice that can greatly improve your ability to navigate todays complex financial environment. Learn from a master (and maybe even future Federal Reserve Board member) and become a better investor." Bill Miller, Chairman and Chief Investment Officer, Legg Mason Capital Management "Paul McCulley is just the man to bring that ole-time religion of economics into the new age of investing and help the reader to make coherent sense of just what is going on here. I should know...I listen to his counsel every day here at PIMCO, and for anyone who lacks a key to our door, this is the next best thing! Profit by the prophet and yes enjoy." William H. Gross, Managing Director, PIMCO "In this highly readable book, McCulley and Fuerbringer provide valuable insights, including how the world of policy making impacts investment decisions. Their entertaining and thoughtful analysis is accompanied by a series of penetrating real-life examples that demonstrate the choices facing investors as they seek to maximize returns and minimize risk. With its wisdom and unique perspective, this book will be of interest to both institutional investors and policymakers." Dr. Mohamed A. El-Erian, President and CEO, Harvard Management Company, member of the faculty, Harvard Business School, and Deputy Treasurer, Harvard University "Theres a reason Paul McCulley is a favorite among financial pros and journalists all over the world. He anticipates investment trends before they happen and helps both professional and amateur investors stay ahead of the curve. This is a must-read book for anyone who wants to build and protect their portfolio in the risky decades ahead." Consuelo Mack, Anchor and Managing Editor, Consuelo Mack WealthTrack, Praise for Your Financial Edge "Paul McCulley is the man to heed. His knowledge of financialmarkets runs deep, and his experience has been the best. Beyond allhis financial and economic wisdom, he is a human being with inborninstincts of kindness and thoughtfulness-attributes that bring tothe reader something richer than just hard facts and sage advice.Jonathan Fuerbringer is the perfect partner for this project, amaster of lucidity and a longtime observer of the best and theworst habits of investors." -Peter Bernstein, bestselling author of Against the Gods "Paul McCulley's insightful observations on the economy andfinancial markets are key inputs to our investment thinking. Thisbook provides analytical tools and actionable advice that cangreatly improve your ability to navigate today's complex financialenvironment. Learn from a master (and maybe even future FederalReserve Board member) and become a better investor." -Bill Miller, Chairman and Chief Investment Officer, Legg Mason Capital Management "Paul McCulley is just the man to bring 'that ole-time religion' ofeconomics into the new age of investing and help the reader to makecoherent sense of just what is going on here. I should know...Ilisten to his counsel every day here at PIMCO, and for anyone wholacks a key to our door, this is the next best thing! Profit by theprophet-and yes-enjoy." -William H. Gross, Managing Director, PIMCO "In this highly readable book, McCulley and Fuerbringer providevaluable insights, including how the world of policy making impactsinvestment decisions. Their entertaining and thoughtful analysis isaccompanied by a series of penetrating real-life examples thatdemonstrate the choices facing investors as they seek to maximizereturns and minimize risk. With its wisdom and unique perspective,this book will be of interest to both institutional investors andpolicymakers." -Dr. Mohamed A. El-Erian, President and CEO, Harvard Management Company, member of the faculty, Harvard Business School, and Deputy Treasurer, HarvardUniversity "There's a reason Paul McCulley is a favorite among financial prosand journalists all over the world. He anticipates investmenttrends before they happen and helps both professional and amateurinvestors stay ahead of the curve. This is a must-read book foranyone who wants to build and protect their portfolio in the riskydecades ahead." -Consuelo Mack, Anchor and Managing Editor, Consuelo Mack WealthTrack