Foreword v
Introduction 1
Chapter 1 Listen to the Market Crowd 7
Chapter 2 A World Darkened by Fear: An Overview of Soviet, German,
and Japanese Aggression from 1929–1945 19
Chapter 3 Stock Markets Struggle: From the Great Depression to the
Start of WWII 35
Chapter 4 “1940: The Most Splendid, Most Deadly Year”: The Time of
England’s Greatest Peril 55
Chapter 5 Besieged and Alone: England in 1941 91
Chapter 6 Operation Barbarossa: Germany Attacks Russia 109
Chapter 7 Miracles at the Coral Sea and Midway: Japan and America
131
Chapter 8 Stock Markets Understood: Nobody Else Did 153
Chapter 9 The Four Horsemen of the Apocalypse Ride Again 173
Chapter 10 France Declines Financially, Economically, and Socially
187
Chapter 11 Gone with the Wind: Preserving Wealth in Italy and
Germany 203
Chapter 12 Stalingrad: The Battle of the Century 231
Chapter 13 Defeats and Then Victories in Asia and North Africa
251
Chapter 14 The Test in Korea: The Last Battle of WWII 275
Chapter 15 Preserving Wealth in a Time of Cholera 303
Chapter 16 Barbarians at the Gate 321
Notes 335
Bibliography 347
Index 353
Barton Biggs spent thirty years at Morgan Stanley. In that time, he formed the firm?s number one- ranked research department, built up its investment management business, and served as chairman of the investment management firm. At various times during this period, he was ranked as the number-one U.S. investment strategist by the Institutional Investor magazine poll and then, from 1996 to 2003, as the number-one global strategist. He was also a member of the five-man executive committee that ran the firm until its merger with Dean Witter in 1996. In 2003, Biggs left Morgan Stanley and, with two other colleagues, formed Traxis Partners. Traxis now has well over a billion dollars under its management. Biggs?s previous book, Hedgehogging, was also published by Wiley and is an international success.
"Barton Biggs has some offbeat advice for the rich: Insure yourself
against war and disaster by buying a remote farm or ranch and
stocking it with 'seed, fertilizer, canned food, wine, medicine,
clothes, etc.' "The ``etc.'' must mean guns.
"'A few rounds over the approaching brigands' heads would probably
be a compelling persuader that there are easier farms to pillage,'
he writes in his new book, 'Wealth, War and Wisdom.'
"Biggs is no paranoid survivalist. He was chief global strategist
at Morgan Stanley before leaving in 2003 to form hedge fund Traxis
Partners. He doesn't lock and load until the last page of this
smart look at how World War II warped share prices, gutted wealth
and remains a warning to investors. His message: Listen to markets,
learn from history and prepare for the worst.
"'Wealth, War and Wisdom' fills a void. Library shelves are packed
with volumes on World War II. The history of stock markets also has
been ably recorded, notably in Robert Sobel's 'The Big Board.' Yet
how many books track the intersection of the two?
"The 'wisdom' in the alliterative title refers to the spooky way
markets can foreshadow the future. Biggs became fascinated with
this phenomenon after discovering by chance that equity markets
sensed major turning points in the war.
"The British stock market bottomed out in late June 1940 and
started rising again before the truly grim days of the Battle of
Britain in July to October, when the Germans were splintering
London with bombs and preparing to invade the U.K.
`Epic Bottom'
"The Dow Jones Industrial Average plumbed 'an epic bottom' in late
April and early May of 1942, then began climbing well before the
U.S. victory in the Battle of Midway in June turned the tide
against the Japanese.
"Berlin shares 'peaked at the high-water mark of the German attack
on Russia just before the advance German patrols actually saw the
spires of Moscow in early December of 1941.'
"'Those were the three great momentum changes of World War II --
although at the time, no one except the stock markets recognized
them as such.'
"Biggs isn't suggesting that Mr. Market is infallible: He can get
'panicky and crazy in the heat of the moment,' he says. Over the
long haul, though, markets display what James Surowiecki calls 'the
wisdom of crowds.'
"Like giant voting machines, they aggregate the judgments of
individuals acting independently into a collective assessment.
Biggs stress-tests this theory against events that shook nations
from the Depression through the Korean War, which he calls 'the
last battle of World War II.'
Refresher Course
"Biggs has read widely and thought deeply. He has a pleasing
conversational style, an eye for memorable anecdotes and a weakness
for Winston Churchill's quips. His book works as a brisk refresher
course.
"What really packs a wallop, though, is his combination of military
history, market action, maps and charts. It's one thing to say that
the London market scraped bottom before the Battle of Britain. It's
another to show it.
"In May and June 1940, some 338,000 British and French troops had
been evacuated from Dunkirk by a flotilla of fishing boats, tugs,
barges, yachts and river steamers. The French and Belgian armies
had collapsed; the Dutch had surrendered. Britain stood alone, as
bombs shattered London and the Nazis prepared to invade. Yet stocks
rallied.
"Mankind endures 'an episode of great wealth destruction' at least
once every century, Biggs reminds us. So the wealthy should prepare
to ride out a disaster, be it a tsunami, a market meltdown or
Islamic terrorists with a dirty bomb.
"The rich get complacent, assuming they will have time ``to
extricate themselves and their wealth'' when trouble comes, Biggs
says. The rich are mistaken, as the Holocaust proves.
"'Events move much faster than anyone expects,' he says, 'and the
barbarians are on top of you before you can escape.'"--Bloomberg
(Jan. 30)
"Traders unnerved by the harrowing news on offer at this particular
moment in history should ease their worried minds with an amble
through Barton Biggs' stellar new book, Wealth, War, & Wisdom.
Biggs...turns his keen economic historian's eye to the last
century's sundry wars, conflicts and other catastrophes to examine
how they affected the economies of both the principal combatants
and the world at large. The moral of his tale, though hardly
radical, is impressively detailed and convincingly argued: A
strategy for the long term is the best way for traders (and
ordinary investors) to build and maintain wealth...[Biggs'] air of
scholarly detachment and lucid prose make Wealth, War & Wisdom
worthy as both an economic primer and history seminar."-Trader
Monthly, February 2008
?air of scholarly detachment and his lucid prose make [the book]
worthy as both an economic primer and history seminar.? (Trader
Monthly, March 2008)
?...completely relevant, indeed essential, to predicting the way
modern financial markets and the economy will act during uncertain
times?? (HereIsTheCity.com, Sat 8th March)
?His clear and lively writing style and his deep knowledge of
markets and investments will entertain?as well as educate?. (Yahoo
Finance, Tuesday 15th April 2008)
"Barton Biggs is a brilliant, legendary and world-renowned wise man
of finance. In this original and absorbing book, he combines his
vast understanding of the world economy with his deep sense of
history to bring us new, important and thought-provoking lessons
from the crucible experience of World War II."-- Michael Beschloss
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