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on 13 January 2009
I found plenty of interest in this volume, but also parts which made my eyes glaze over. I have a background in economics, but I do find thickets of financial jargon hard to comprehend at times. I have to admit that I skipped a few pages here and there, but only where I couldn't see the relevance to my own interests.

The author covers what he calls the 'journey' to the 'secular destination' in the global financial and economic landscape. Essentially this represents changes in the global economy which are taking place now and are likely to continue for a number of years into the future: the buildup of current account surpluses in emerging and oil-rich economies in recent years, and the counterpart deficits in some countries in the rich world, particularly the US; the emergence of Sovereign Wealth Funds (SWFs) in the former group of countries and their evolving investment strategies; and the shift in global growth towards emerging economies and away from the US as the global 'spender of last resort'.

The author traces, in a somewhat opaque fashion, the origins of the current financial crisis, though the book was published in early 2008 and he misses out on the really serious financial turmoil that took place towards the end of that year. To be fair however, he does promise a 'bumpy ride' to his 'secular destination'.

He calls for reform on the part of investors, and national and international policy-makers to make the 'journey' of economic adjustments as smooth as possible. It may be a little late for that given recent events, but perhaps his intentions could be heeded to avoid further major disruptions. I was really looking forward to what he had to suggest in these areas but I was disappointed. He has good intentions, but is vague in his suggestions and admits that the jury is out in many of the debates. If that is the case, why promise much with chapter headings such as 'an action plan for national policy-makers'?

A couple of other gripes: the graphs are poorly presented and labeled, and he does name-drop current and ex-colleagues quite a bit, which was unnecessary.

The author is clearly highly intelligent and accomplished and the book was ranked by The Economist as one of the best reads for 2008. All in all, for me, there were good bits, poor bits, and difficult bits. The reader will need a background in economics and finance to fully grasp it. And if they read and understand the financial pages regularly they probably won't need this book.
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on 16 November 2008
When Markets Collide: Investment Strategies for the Age of Global Economic Change
Mohamed El Erian has spent many years involved in the emerging markets and this book gives a very valuable insight into the impact that these markets are having on the financial landscape and how to capitalize on it.

In future the emerging markets will be much more important drivers of the world economy than the US, UK, Europe or Japan.

The book talks about the crisis caused by the undervaluation of risk combined with the under-assessment of the quantity of risk outstanding and the consequential fundamental changes taking place. The sheer complexity of the structure of financial products and the inability of the regulatory system to keep on top of these developments has been a catalyst in the resulting financial chaos as has the advance in technology. Technology has undermined the role of the sell side in price discovery which has caused the sell side to extend their activities into new and unfamiliar areas at greater risk of market accidents.

Derivative based products significantly reduced barriers to entry in a range of markets and the complexity stemmed from the ground upwards. Domestic mortgages are taken as a good example. Gone were the days of plain vanilla fixed or floating loans. Instead a plethora of structures were offered, many so complex that household borrowers didn't understand them.

The author emphasises the importance of interpreting signals and differentiating between what is noise and what are real structural changes. He focuses on China as being the most important contributor to world growth. Emerging economies which have greatly benefited from the US and parts of Europe by sustaining consumer demand way beyond income growth are now building up massive amounts of wealth.

Time and time again the Sovereign Wealth Funds are mentioned.

This book gives us food for thought about how to assess the new financial landscape given that many of the emerging markets have shifted from debtors to creditors and are now extremely important drivers of the world economy. It encourages the reader to keep a close eye on the SWFs and their allocation of capital. It gives us some ideas as to construct an international portfolio. It also talks about changes that will be required in organisations such as the IMF.
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on 17 December 2008
No doubt Mohamed El-Erian have learned the slang of the City and Wall Street. He punishes the reader with a dense, and many times unfocused, book written perhaps too early and with the intention to explain the dynamics that are changing the global economy. He was the first to get a book out so good for him, but it is not the best and definitely you can summarise his message in less than 20 pages. The other 280 pages are full of the same annoying words used by Investment bankers trying to look smart. Overall, the book is a collection of his contributions to Financial Times, WSJ as well as conferences, and Mohamed has been adding comments here and there to make this look like a book. Again and again we read about the "secular" destination and every chapter gets introduced as he did in the preface.

Mohamed is extremelly inteligent and and one of the true intense minds in the market, but his book is awful. I hope he and his editor make an effort in the second edition as they will need to update it with the more juicy events that happened after he wrote this "finished-in-a-rush" book in January 2008. In any case, he won the award of "book of the year" by FT and Goldman Sachs so I guess it is no longer necesary to have writing skills but just telling people how to distinguish "noise" from true signals. Analysts and associates will enjoy this book, but serious professionals will put it down after few pages.
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on 2 January 2009
This book is so unbelievably bad that after reading the first 10 pages I was in a rage that I had actually paid money for it. Later I managed to go through selected pages across the whole book, and it got even worse! It is the equivalent of the homework of a 1-st year university student that has collected superficial materials from the media and collected them in a text without having any idea or personal experience on the subject. I have read many good books on investment (among others Inside the House of Money, Hedge Hunters, Hedge Hogging, Fooling Some People Most of the Time) and compared to them, this one is the equivalent of a ponzi-scheme - you pay money and get nothing for it. I also work in finance and I agree with every word that Julio Cortazar says below. The only thing where I have my suspicion is that El Erian himself has written the book. It seems more probable that it was his secretary.
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on 22 May 2011
In short, I'd say it's a significant book for investors and those who wish to understand the modern world of investing.
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on 10 February 2009
The book in a nutshell is complicated and unfocused. Definitely not intended for the ordinarily educated guy on the street. I bought the book filled with very high expectations only to be let down by the technical and highly incomprehensible jargon it is filled with.
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on 11 January 2009
I was shocked to see poor reviews for this book - maybe people buying it were expecting a novel (or rather a financial thriller). I work in finance and most of people who I know that read the book rate it very highly. Most of them are experienced practitioners in the financial industry yet found the key points that the author raises refreshing and worthwhile. Personally, I think the book is well written and offers a coherent story for key audience being both professionals in the finance and policy makers.
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on 21 August 2015
Mohamed El-Erian has both the private sector and public sector experience as he worked at the IMF, for the Harvard Endowment and Pimco. That is a unique set of experience that he leverages in this book to take both an investor and a policy maker point of view.

He starts providing his "proprietary tool" to identify turning point in the market:
- Observe noises
- Identify the source of the noise that creates an unusual market dislocation
- Be disciplined in treating each episode of such noise as potentially containing important signals
- Assess the actual signal content through an evaluation based on the a priori modelling of the economic or market phenomenon.
- Differentiate between factors that influence the destination and factors that influence the journey
- only then actively pursue the views of the experts
- Be open to finding not only cyclical influences but also secular ones

The book has been written in 2008 and his view of major changes or "the new destination" were the following:
- Increasing importance of Emerging Market economies in the world economy
- EM growth driver will evolve away from high reliance on exports and towards internal consumption
- Inflation due to commodity price increase
- Global allocation of capital increasingly influenced by SWF
- Securitisation is here to stay.

He then provides his asset allocation for a 8-10% expected long term nominal return, 5-7% real return and 8-12% volatility :
Equities: 49%
United States: 15%
Other advanced economies: 15%
Emerging economies: 12%
Private: 7%

Bonds: 14%
United States: 5%
International: 9%

Real Assets:27%
Real Estate: 6%
Commodities: 11%
Inflation protected Bonds: 5%
Infrastructure: 5%

Special opportunities: 8%

He mentions that going forward, asset allocation will be increasingly done by risk factor rather than asset classes.
he also mentions that efficient markets are better tracked passively while inefficient markets can be actively managed.
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on 4 January 2009
I'm not a professional finance wizzard but I am a well educated citizen of the world with a keen interest in the sector. I enjoy the lighter publications (war stories about the Brothers, Barbarians etc..) on the city/street but also the more analytical stuff.

This book has no message, no content and looses the reader after 2 pages. Don't buy it ! It is not good and does not deserve an award.

I invested time in trying to change my opinion. It is impossible.
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on 20 May 2009
disappointing book that reads like a collection of memos sent by senior management for town hall meetings with staff. full of clichés, not a single original thought. this is sell-side research as read and poorly regurgitated by a career manager. as unimpressive as the writer's investment management record.
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