This book explores the weak explanatory and predictive power of theories across disciplines, explains reasons for limited expertise after centuries of scientific effort, and sets forth strategies to accelerate knowledge and manage a future we can only dimly comprehend. Gaps in knowledge arose because common, natural and artificial phenomena are fundamentally hard to understand, and in expertise persists because research is unproductive. This book argues that weak research comes with huge opportunity cost because it stymies optimum decision making by government, corporations and individuals. Research needs restructuring which must come from governments' top down requirement that funding bodies foster applied research with real-world impact, and that universities influence scientific publishers to improve their publications' integrity. This book seeks to catalyse extinction events for theories in most disciplines, which would clear a path for solving multiple crises in research. The author cautions that this process would be disruptive, unpopular and painful.

This provocative book provides insight into a finance industry that is run for the benefit of banks and service providers who rely on Beatles-era theories and regulation which are totally unsuited to the modern world. The author has a near-unique perspective based on over 30 years of working - literally around the globe - for corporates, fund managers and as finance academic. In his last role his research has focused on investment decisions, and during 2012 he interviewed 34 fund managers in Istanbul, London, New York and Melbourne. He blends rich understanding of finance theory and practice to unravel the investment industry's structure and show how banks and other finance institutions privilege themselves at investors' expense. The book highlights that finance industry self-regulation is weak. Risks from inexpertise, theft, bad data and other sources are high. Regulation of the industry appears to be ineffectual with the setting of such a high bar that it is virtually impossible to successfully prosecute even the most blatant and egregious offenders. The book closes with the simple suggestion that corporations' regulations be altered to introduce the strict liability offence of being a director or officer of a large bank that becomes bankrupt. This follows the strategy of legislation that has been effective in cleaning up the environment, making workplaces safer and reducing crime by punishing those responsible for an offence.

This provocative book provides insight into a finance industry that is run for the benefit of banks and service providers who rely on Beatles-era theories and regulation which are totally unsuited to the modern world. The author has a near-unique perspective based on over 30 years of working - literally around the globe - for corporates, fund managers and as finance academic. In his last role his research has focused on investment decisions, and during 2012 he interviewed 34 fund managers in Istanbul, London, New York and Melbourne. He blends rich understanding of finance theory and practice to unravel the investment industry's structure and show how banks and other finance institutions privilege themselves at investors' expense. The book highlights that finance industry self-regulation is weak. Risks from inexpertise, theft, bad data and other sources are high. Regulation of the industry appears to be ineffectual with the setting of such a high bar that it is virtually impossible to successfully prosecute even the most blatant and egregious offenders. The book closes with the simple suggestion that corporations' regulations be altered to introduce the strict liability offence of being a director or officer of a large bank that becomes bankrupt. This follows the strategy of legislation that has been effective in cleaning up the environment, making workplaces safer and reducing crime by punishing those responsible for an offence.

At a time when unacceptable risk taking is rightly condemned, how can organizations still benefit from the upside of risk? Can risk still be good? Written by an author who has managed risk, teaches about risk, but most importantly of all has researched the theory of risk, this book will help senior executives dial up the right level of risk within their organizations in order to enhance performance. There are many risk management techniques that are known to work and risk management has logged many successes, but that doesn't mean managers understand why they work, how and why risks arise, and how organizations can be shaped strategically to optimize the benefits of well-judged business risks. Dr Les Coleman argues that finance and management risk has been a theory-free zone, similar to medicine in the Middle Ages, when physicians were aware of surgical techniques and medicines that worked, but did not know why and were impotent in the face of systemic illness. Today risk managers face much the same situation: They know of techniques that work such as audits, controls and procedure guides. Nevertheless, they rarely anticipate, much less prevent, serious failures. They have no comprehensive knowledge framework for targeting optimum risk levels. This timely book fills some of that gap with an outline of the nature and sources of risk in firms. It sets out a body of risk knowledge to support its management, particularly at the corporate level, in much the same way that our understanding of human physiology and the physical sciences support modern medical and engineering techniques. The reader will learn, for example, how risk attitudes and outcomes flow through an organization and about creative techniques such as asset-liability management. In this area of corporate finance so critical for executives and directors, Risk Strategies will help responsible CFOs and other senior managers, together with teachers and students of management, extend their knowledge and risk management skills.

This book explores the weak explanatory and predictive power of theories across disciplines, explains reasons for limited expertise after centuries of scientific effort, and sets forth strategies to accelerate knowledge and manage a future we can only dimly comprehend. Gaps in knowledge arose because common, natural and artificial phenomena are fundamentally hard to understand, and in expertise persists because research is unproductive. This book argues that weak research comes with huge opportunity cost because it stymies optimum decision making by government, corporations and individuals. Research needs restructuring which must come from governments' top down requirement that funding bodies foster applied research with real-world impact, and that universities influence scientific publishers to improve their publications' integrity. This book seeks to catalyse extinction events for theories in most disciplines, which would clear a path for solving multiple crises in research. The author cautions that this process would be disruptive, unpopular and painful.

The modern finance paradigm is incomplete. Obvious gaps include poor performance of professional investors, puzzles enough in equity markets to support a sub-discipline of behavioural finance that patches over irrational biases and mispricings, and chronic, but inexplicable, financial crises. As with so many other disciplines, existing finance theory explains less than a tenth of what we see in markets and investment. A new paradigm of investment is needed. New Principles of Equity Investment brings together robust scientific methodology with empirical evidence to propose a new paradigm of equity investment. It begins with a wide-ranging review of investor practices using mainly US and European research and surveys, and then outlines the nature of investment risk, the links between equity returns and institutional factors, and the structure of equity markets. The result is a sophisticated description of what we know is true about investment, and a frank assessment of the limitations to investment expertise. The author then presents a coherent, workable theory of equity prices that can be applied in practice by equity investors, and explains logical investor behaviours that have been thought of as biases. Written by an academic with many years of practical investment experience, this book will provide new insights for equity investors who are looking for new perspectives and a better understanding of today's complex markets.

Institutions now dominate trading in equities around the world. Mutual funds are the most prominent, and doubly important as custodians of retirement savings. Despite this, there is no comprehensive description of fund manager behaviour, much less a matching theory. This is troubling because one of the most economically significant puzzles in finance is why experienced, well-resourced fund managers cannot outperform the market. Applied Investment Theory: How Equity Markets Behave, and Why brings together academic research, empirical evidence and real market experience to provide new insights into equity markets and their behaviours. The book draws upon the author's rich industry experience and academic research, plus over 40 interviews with fund managers on three continents and across different markets. The result is an innovative model that explains the puzzle of poor performance by mutual funds in terms of structural features of markets, the managed investment industry, and the conduct of fund managers. This book provides a fully integrated depiction of what markets and investors do, and why - insights that will resonate with the needs of investors, wealth managers and industry regulators. It is fully documented, but free of jargon and arcane math, and provides a grounded theory that is relevant to anyone who wants to pierce the opacity of mutual fund operations. Applied Investment Theory sets out a new paradigm in investment that is at the forefront of what should be an industrial-scale development of new finance theory following two decades of almost back-to-back financial crises.

The book answers a simple question: when managers and companies face a decision with two outcomes that are safe and risky, what leads them to choose the risky alternative? The answer starts with a detailed review of the theory behind risk and decision making by managers. The book then gathers real-world evidence using two surveys of senior managers and directors to analyze why they take risks, and how companies control risks.