ISBN-10:
0071416641
ISBN-13:
9780071416641
Pub. Date:
07/28/2005
Publisher:
McGraw-Hill Companies, The
The Irwin Guide to Using The Wall Street Journal (Seventh Edition) / Edition 7

The Irwin Guide to Using The Wall Street Journal (Seventh Edition) / Edition 7

by Michael Lehmann
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Overview

The bestselling guidebook to the world's most trusted newspaper, now fully revised and updated

The Wall Street Journal has long been an essential daily business resource, and since 1984, The Irwin Guide to Using the Wall Street Journal has helped professionals understand and get full value from the paper's detailed, up-to-the-minute information. The book's clear explanations and illustrations have helped more than a quarter million readers skillfully use the Wall Street Journal to identify market-moving events, track business cycles, find facts and figures, get before-the-bell access to vital information, and more.

Dramatic changes in both the global business arena and the Journal itself have led to the need for a revised and updated guide. The seventh edition features:

  • Six new chapters, along with hundreds of allnew graphs, charts, and examples straight from the pages of The Wall Street Journal
  • New screen shots from the paper's increasingly popular online edition
  • Instant-access Web links to important government and industry sites

Product Details

ISBN-13: 9780071416641
Publisher: McGraw-Hill Companies, The
Publication date: 07/28/2005
Series: Irwin Guide to Using the Wall Street Journal Ser.
Edition description: Seventh Edition
Pages: 368
Product dimensions: 6.40(w) x 9.30(h) x 1.25(d)

About the Author

Michael B. Lehmann, Ph.D., has been a professor of economics at the University of San Francisco for more than 35 years. The author of Real World Economic Applications: The Wall Street Journal Workbook and the coauthor of Macroeconomics Online, Professor Lehmann has lectured extensively on business and investment and been featured and quoted in TheStreet.com, the San Francisco Examiner, and other popular media resources. His seminar based on The Irwin Guide to Using The Wall Street Journal is popular with investors as well as corporations as an in-house training program.

Read an Excerpt

Let's Plunge Right In. Examine Chart 1-1 on page 4 with an investor's eye. The vertical axis provides values for the Dow Jones Industrial Average and the Consumer Price Index, while time is on the horizontal axis.

Although the chart portrays the entire post-World War 11 era, focus on the years since 1970. Notice that the Dow fluctuated in a range around 1,000 in the 1970s, tripled in the 1980s, flirted with 3,000 by 1990, then tripled again in the 1990s, rising to about 10,000 in 1999.

Since the Dow tripled in the 1980s and 1990s, is it reasonable to assume that it will triple again and go to 30,000 by the year 2010? That seems farfetched, but who in 1980, let alone 1970, could have anticipated 10,000 on the Dow by the end of the century?

Now you might say, "Wait a minute. Look at the Dow in the 1970s. It fluctuated around 1,000 and went nowhere. Perhaps similar conditions will prevail in the first decade of the new century. The Dow may not triple. Indeed, it might not go anywhere."

These doubts and concerns make sense. What forces held the stock market back in the 1970s? What forces propelled it forward so rapidly in the 1980s and 1990s? Can we shed light on past events and gain a clue to the future?

Could the same force have generated the bust of the 1970s and the boom of the 1980s and 1990s? Yes. It could and did. In a word, inflation lay behind both sets of events. High inflation held stocks back in the 1970s, and low inflation propelled them forward in the 1980s and 1990s.

Finally, keep an additional point in mind before you move on. The spectacular run-up in stock market values in the 1980s and 1990s coincided with the decline in the rate of inflation after asevere escalation of prices in the 1970s. Suppose prices begin to decline in the first decade of the new century? What effect will deflation have on the investment climate in general and upon stocks in particular? Deflation could generate an entirely new dynamic.

This means you will have to use the investment data on your own, without an interpreter. You will have to decipher the Dow Jones Industrial Average, GDP, capacity utilization, price/earnings ratio, housing starts, advance/decline line, auto sales, and other statistical series and reports. You must use them to gain an understanding of developing business and investment trends so that your judgments and opinions are not merely based on (and therefore biased by) popular analyses and secondary sources.


It's worth some time and effort to learn how to deal with the data on your own, because until you come to grips with the data you can't honestly say that you have formed your own opinion about current economic and business events, let alone about what the future holds. The news media now serve as intermediaries between you and the data. Furthermore, no matter how many experts are quoted, you still aren't dealing with the facts, only with someone else's interpretation of them. And these interpretations arc: often contradictory-and therefore confusing. At some point you have to wonder: Do the "experts" know what they're talking about? And while you are waiting for them to sort things out, your investment opportunities may have passed. On the other hand, your desire to master the data may also stem from your own business needs. Will demand for your product be weak or strong two quarters from now or two years from now? Is this the time to lay in additional inventory, hire key personnel, and build more plant? Or, despite the current level of orders, would it be more prudent to cancel those plans? Can you beat the competition to the punch, one way or another? Are interest rates likely to rise or to fall? Is deflation merely a buzzword, or are we truly about to embark upon an era of continuously falling prices`? That's just a hint of the issues you can begin to analyze on your own; all it takes is learning to come to grips with a small number of regularly released statistical reports.

You may also wish to conduct your own analysis of current economic events because they form the foundation for so many other social and political developments. Were President Reagan's tax cut and supply-side economics responsible for the early 1980s decline in inflation, or should the Federal Reserve System take the credit? Has the era of federal-budget deficits come to an end, and should we be optimistic about federal budget surpluses for the foreseeable future? And what about our chronic balance of trade deficit? What does it mean and how important is it? Do your answers to these questions reflect your analysis of the data, your political point of view, or the opinions of your favorite commentator? Maybe they should reflect all three, but they can reflect only the last two until you learn to deal with the numbers on your own. Once you do that, your own judgment will be of greater importance to you and others.

Don't misunderstand: Dispensing with expert advice is not the objective. Even the world's leading authority on a subject must consult other experts as a continual check on his or her understanding. This challenges the authority and helps prevent sloppy thinking. The point is: If you become the expert by handling the data on your own, you will know whether or not the other experts make sense. Otherwise, you'll never be certain whether you're receiving sound or flimsy advice...

Table of Contents

Part IThe Big Picture: The Economic Climate and the Investment Outlook1
1Introduction2
2The Business Cycle12
3Stocks20
4Output, Efficiency, and Costs32
5Business Capital Expenditures66
6Inventories74
7The Postwar Business Cycle: The Role of Consumer Demand81
8The Federal Reserve System: Monetary Policy and Interest Rates122
9Federal Fiscal Policy154
10U.S. International Transactions176
11Leading Economic Indicators200
12Old Economy and New Economy: Summary and Prospect206
Part IIYour Choice of Investments209
13The Stock Market210
14Commodities and Precious Metals287
15Long-Term Interest Rates305
16Money-Market Investments333
Appendix AStatistical Series Published in the Wall Street Journal in Alphabetical Order359
Appendix BStatistical Series Published in the Wall Street Journal in Chapter Order364
Appendix CListing of Statistical Series According to the Wall Street Journal Publication Schedule369
Appendix DThe Wall Street Journal Online Web Sources374
Appendix EFurther References390
Index399

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