This innovative new teaching text provides an introduction to personal
investment in a world defined by uncertainty. With a focus on risk, socio-economic change
and the regulatory framework, and a wealth of international case studies, the book covers
all the key issues that affect personal investment decisions and their ultimate success or
failure.
MARIANA MAZZUCATO holds a Chair in the Economics of Innovation at The
Open University, UK. She is Director of the Open University's inter-faculty research
centre Innovation, Knowledge and Development (www.open.ac.uk/ikd) and is Coordinator of a
large European Commission FP7 project called Finance, Innovation and Growth. She is
currently a Visiting Professor at the Bocconi University in Milan.
ALAN SHIPMAN was an economic researcher, business journalist, emerging
markets analyst and freelance writer before joining The Open University as an economics
lecturer in 2008. His areas of published research include markets, globalization, economic
method and the growth of social science.
ANDREW TRIGG is Senior Lecturer in Economics at The Open University,
UK.
Table of Contents
Contributors ix
Preface xi
Introduction 1
1 Themes in personal investment 6
2 Structure of the book 17
References 19
Part 1 Products and Players 21
Chapter 1 From saving to investment 25
1 Introduction 27
2 High-street banks: the first place to save? 31
3 Risk and return in banking 38
4 Banks and financial markets 55
5 Conclusion 62
References 64
Chapter 2 Investment choices 67
1 Introduction 69
2 Investment choices 71
3 Understanding risk 81
4 Evaluating risk and return 91
5 Non-financial investments 106
6 Conclusion 109
References 110
Part 2 Strategies and Markets 113
Chapter 3 Risk-return strategies 117
1 Introduction 119
2 Taxation and transaction costs 121
3 Building a portfolio 126
4 Balancing risk and return 138
5 Measuring investment performance 148
6 Investment in practice 157
7 Conclusion 162
References 163
Chapter 4 Markets and players 165
1 Introduction 167
2 What financial markets are intended to provide 169
3 Derivative markets 176
4 Financial market efficiency 188
5 Active investment management in the light of the EMH 195
6 'Infomediaries' and the problem of unbiased information 199
7 Conclusion 204
References 205
Part 3 Bubbles and the Economy 209
Chapter 5 Economic fluctuations 213
1 Introduction 215
2 Economic fluctuations 217
3 Are economies self-correcting? 222
4 Economic indicators 235
5 Fiscal and monetary policy 242
6 The open economy 250
7 Conclusion 254
References 255
Chapter 6 Bubbles and investment behaviour 259
1 Introduction 261
2 Bubbles in historical perspective 265
3 Categorising asset bubbles 273
4 Overvalued compared to what? 277
5 Volatility and animal spirits 280
6 Efficiency or madness of crowds? 283
7 Behavioural finance 285
8 Implications for personal investment strategies 296
9 Conclusion 300
References 301
Part 4 Regulation and the Long Term 305
Chapter 7 Regulating the financial system 309
1 Introduction 311
2 Financial markets and financial regulation 313
3 Financial liberalisation in the UK 322
4 UK financial regulation 325
5 Regulatory challenges 334
6 International financial regulation 346
7 Conclusion 353
References 355
Chapter 8 Conclusion: investing for the long term 359
1 Introduction 361
2 Retirement planning for the individual investor 364
3 Retirement as a social challenge: the case of pensions 372
4 Conclusion 385
References 386
Glossary 389
Acknowledgements 429
Index 431
304 pages, Paperback
