Contents -- Acknowledgements -- Preface -- I Key Concepts -- 1. Arbitrage, Risk Arbitrage and the Favorite-longshot Bias -- The favorite-longshot bias -- Risk arbitrage in the US presidential election -- 2. The Bond Stock Earnings Yield Differential Model -- Predictive Ability of the Bond-Stock Earnings Yield Difference Model -- 3. Investor Camps -- The various efficient/inefficient market camps: Can you beat the stock market? -- How do investors and consultants do in all these cases? -- The importance of getting the mean right -- Errors in Means, Variances and Covariances: Empirical -- Conclusion: spend your money getting good mean estimates -- use historical variances and covariances -- II Hedge Funds, Sovereign Wealth Funds and Other Investment Agglomerations -- 4. Average Hedge Funds and their Evaluation -- 5. Incentives and Risk Taking in Hedge Funds -- 6. Evaluating Superior Hedge Funds -- The Renaissance Medallion Fund -- Evaluating superior funds in the UMASS hedge fund data base using the DSSR -- Outstanding funds in the UMASS DHF universe -- Final Remarks -- 7. Investment in Own-Company Stock -- Stock ownership decisions in defined contribution pension plans -- Discussion of the results -- Grace Groner's legacy: A good long term buy and hold own-company stock story -- 8. Cutting Through the Hype on Sovereign Wealth Funds -- Sovereign funds are not monolithic -- Sovereign funds are big -- A taste for financials -- But not as big as some optimists think or as pessimists fear -- Increase in strategic stakes oneo opportunism or evidence of achange in strategy? -- Politics a likely headwind to acquisitions -- 9. A New Age for Liquidity -- 10. Government Owned Pensions: Asset Allocation and Governance Issues -- Types of sovereign funds -- Is there a common asset allocation for pension funds? -- Governance Issues of public pension funds.

Intergenerational borrowing -- Regional Trends -- Asia -- Middle East -- Europe -- Conclusion -- 11. Update on Yale's Approach to Endowment Investing -- Summary and comments on Yale's results and approach -- 12. A Risk Arbitrage Convergence Trade: The Nikkei Put Warrant Market of 1989-90 -- The historical development leading up to the NSA put warrants -- NSA puts and calls on the Toronto and American stock exchanges,1989-1992 -- 13. Kelly Capital Growth Investing -- Blackjack -- Betting on unpopular lotto numbers using the Kelly criterion -- Good and bad properties of the Kelly criterion -- Calculating the optimal Kelly fraction -- Calculating the optimal Kelly fraction -- Secured Annual Drawdown: b -- Appendix -- 14. InnoALM, the Innovest Austrian Pension Fund Financial Planning Model -- Some Typical Applications -- Model Tests -- Conclusions -- III Seasonal Effects and Other Anomalies -- 15. Investing in the January Turn-of-the-Year Effect with Index Futures -- The January effect -- Commodity trading: investing in the January small cap effect inthe index futures markets -- Conclusion -- 16. The January Barometer -- January barometer research update -- Move this Around -- The January barometer research -- Other Studies -- How to Trade the January Barometer (JanB) -- The International January Barometer -- 17. Sell in May and Go Away and the Effect of the Fed -- The effect of the Fed meetings -- 18. 60-40 Pension Fund Mixes and Presidential Party Effects -- Election cycles -- US bond returns after presidential elections -- Political e ects: when Congress is in session -- Some simple presidential investment strategies -- Final Remarks -- IV Volatility, Correlation and Liquidity -- 19. Thoughts on the VIX Fear Index -- 20. Changing Correlations: Rising VIX and Violent Market Moves -- Growth of derivatives.

What is a subprime loan and why have they caused so much trouble in so many places? -- V Can We Predict Stock Market Crashes? -- 21. Stock Market Crashes in 2006-2009: Were We Able to Predict Them? -- Background -- The Chinese Shanghai Stock Market Crash -- The Iceland stock market crash -- A brief discussion of Iceland -- The Iceland financial crisis continues -- Comments on the crash signals for the three banks from Lleo and Ziemba (2012) -- The US 2007-2009 crash -- Logarithmic Model -- Final remarks -- 22. Three Mini Crashes in US and World Equity Markets -- Some background on crash measures -- Declines and crashes not predicted by the measures -- A primer on Chinese investment markets -- 23. What Signals Worked and What Did Not, 1980-2009 -- Shorting S&P500 puts in a declining market -- Gold coins -- Bubbles? -- 24. What Signals Worked and What Did Not, 1980-2009, Part II -- The subprime crisis and how it evolved -- Household and government debt -- Favoring the financial sector: evaluating the policy responses -- 25. What Signals Worked and What Did Not, 1980-2009, Part III -- The sell on Rosh Hashanah and buy on Yom Kippur anomaly -- Ramadan -- Inflation versus Deflation -- Gold -- Housing trends -- What's going on in China? -- Income inequality and government regulation -- Japan: Still a lot of trouble -- Conclusion -- 26. How to Lose Money in Derivatives and Examples of Those Who Did -- The Failure of Long Term Capital Management -- The imported crash of October 27 and 28, 1997 -- A walk on the wild side -- Overbetting yields frequent trading disasters -- The 2006 Amaranth Advisors natural gas hedge fund disaster -- Valuing a fund -- Background, adapted from Till (2006) -- The trade and the rogue trader -- Is learning possible? -- Possible utility functions of hedge fund traders -- Winners and losers -- VI Bubbles and Debt.

27. Understanding the Financial Markets in the Subprime Era: The 2007/9 Crisis -- Societe Generale -- CMO, CDO trouble continued -- Who will bail out the ailing banks and financial institutions? -- What is Warren Buffett thinking and doing? -- Summary -- 28. Bubbles -- The 2010 outlook -- What all the squealing from the PIIGS means -- 29. China: Navigating the Olympic Risks -- Credit markets and financial institutions -- Equity markets -- Chinese role in global trade -- 30. Turkey's Juggling Act: Can it Live up to Potential? -- Turkey on Track for a Soft Landing: For Now -- How Much Rebalancing? -- Financing Strains: Catching Up Too Quickly -- Booming Istanbull -- Turkey Remains Exposed to a Series of Regional Crises that Risk Undermining Domestic peace -- What Sort of Structural Reforms Might Help -- 31. Testing Resiliency: Protest and Natural Disasters -- Institutional resiliency and fragility -- Resiliency of global fuel markets -- Nuclear Disaster Test to Global Electricity -- Supply Chain vulnerabilities -- 32. It's a Gas, Gas, Gas! -- US Charging Ahead -- Other Players: shift in Market Share -- The Demand Side: All About Asia -- The Shale Mirage: Tricky in Europe -- Offshore gas in Mediterranean and Africa -- 33. Thoughts on the Current Market Environment, Risks and Returns -- Penalties for losses are not great enough -- Monthly data -- Thoughts and data on the US economy and housing market -- 34. What's Wrong with the US? -- The August-September 2011 turbulent period -- The US stock market and European debt issues -- What can the US do to improve the situation? -- 35. Investing Around the World -- Korea -- India -- Russia -- China -- Cyprus unemployment: too close to Greece -- VII Investing and Arbitrage in NFL Football and Horse Racing -- 36. Blunder or Correct Decision? The Belichick Decision to go forit on 4th Down.

37. The 2010 and 2011 Super Bowls and the Elo Ranking System -- The role of Las Vegas -- Super Bowl Playo Ratings -- The NFL football betting market -- An educated guess that paid off -- Update to February 7, 2011 -- 38. Risk Arbitrage in the NFL 2012 Playoffs and the Super Bowl -- The February 5, 2012 Super Bowl in Indianapolis -- Recap of the Super Bowl -- Recap of the Playoffs -- New York Giants at Green Bay -- Pittsburgh at Denver: which Tebow will show up? -- Denver at New England: a learning experience for Tebow to watchthe great Brady -- 39. The One That Got Away: The Hitable 2 Million Pick 6 at the Breeders' Cup -- How a 2 million pick six at the Breeders' Cup should have been won -- Exotic Racetrack Betting Book, 2013 -- Update on the January column -- 40. Two Super Horses -- 41. Farewell to the Queen and to the Princess of US Thoroughbred Racing -- Zenyatta for horse of the year honors in 2010 -- Update February 7, 2011 -- 42. The Dr. Z Place and Show Racetrack Betting Systems Past and Present -- Transactions costs -- Three to beat the Breeders' Cup by Bruce C Fauman -- First Race: The Juvenile, 1 mile, for 2 year old colts and geldings, purse 1,00,000. -- Second Race: The Juvenile Fillies, 1 mile, for 2 year old fillies, purse 1,000,000 -- Third Race: the Sprint, 6 furlongs, for 3 year olds and up, purse1,000,000. -- Fourth Race: The Mile, 1 mile on the grass, for 3 year olds and up, purse 1,000,000 -- Fifth Race: The Dista , 1 1/4 miles, for fillies and mares, 3 yearolds and up, purse 1,000,000 -- Sixth Race: The Turf, 1 1/2 miles on the grass, for 3 year olds and up, purse 1,000,000. -- Seventh Race: The Classic, 1 1/4 miles, for 3 year olds and up, purse 3,000,000 -- Eighth Race: Fleet Nashrullah Stakes, 6 furlongs, for 2 year olds, purse 60,000 added.

Ninth Race: Seabiscuit Claiming Stakes, 1 1/2 miles on the grass, for 3 year olds and up, purse 100,000 added.