Prediction markets (also known as predictive markets, information markets, decision markets, idea futures, event derivatives, or virtual markets) are speculative markets created for the purpose of making predictions. The current market prices can then be interpreted as predictions of the probability of the event or the expected value of the parameter. For example, a prediction market security might reward a dollar if a particular candidate is elected, such that an individual who thinks the candidate had a 70% chance of being elected should be willing to pay up to 70 cents for such a security.

People who buy low and sell high are rewarded for improving the market prediction, while those who buy high and sell low are punished for degrading the market prediction. Evidence so far suggests that prediction markets are at least as accurate as other institutions predicting the same events with a similar pool of participants.^[1]

History[link]

One of the oldest and most famous is the University of Iowa's Iowa Electronic Market. The Hollywood Stock Exchange, a virtual market game established in 1996 and now a division of Cantor Fitzgerald, LP, in which players buy and sell prediction shares of movies, actors, directors, and film-related options, correctly predicted 32 of 2006's 39 big-category Oscar nominees and 7 out of 8 top category winners. HedgeStreet, designated in 1991 as a market and regulated by the Commodity Futures Trading Commission, enables Internet traders to speculate on economic events.

Prediction markets have a long and colorful lineage. Betting on elections was common in the U.S. until at least the 1940s, with formal markets existing on Wall Street in the months leading up to the race. Newspapers reported market conditions to give a sense of the closeness of the contest in this period prior to widespread polling. The markets involved thousands of participants, had millions of dollars in volume in current terms, and had remarkable predictive accuracy.^[2]

Around 1990 at Project Xanadu, Robin Hanson used the first known corporate prediction market. Employees used it in order to bet on, for example, the cold fusion controversy.

In July 2003, the U.S. Department of Defense publicized a Policy Analysis Market and on their website speculated that additional topics for markets might include terrorist attacks. A critical backlash quickly denounced the program as a "terrorism futures market" and the Pentagon hastily canceled the program.

Prediction markets are championed in James Surowiecki's 2004 book The Wisdom of Crowds, Cass Sunstein's 2006 Infotopia, and How to Measure Anything: Finding the Value of Intangibles in Business by Douglas Hubbard.^[3]

The research literature is collected together in the peer reviewed The Journal of Prediction Markets, edited by Leighton Vaughan Williams and published by the University of Buckingham Press. The journal was first published in 2007, and is available online and in print.^[4]

In John Brunner's 1975 science fiction story The Shockwave Rider there is a description of a prediction market that he called the Delphi Pool.

In October 2007 companies from the United States, Ireland, Austria, Germany, and Denmark formed the Prediction Market Industry Association,^[5] tasked with promoting awareness, education, and validation for prediction markets.

Accuracy[link]

Some academic research has focused on potential flaws with the prediction market concept. In particular, Dr. Charles F. Manski of Northwestern University published “Interpreting the Predictions of Prediction Markets”,^[6] which attempts to show mathematically that under a wide range of assumptions the "predictions" of such markets do not closely correspond to the actual probability beliefs of the market participants unless the market probability is near either 0 or 1. Manski suggests that directly asking a group of participants to estimate probabilities may lead to better results.

However, Steven Gjerstad (Purdue) in his paper "Risk Aversion, Beliefs, and Prediction Market Equilibrium,"^[7] has shown that prediction market prices are very close to the mean belief of market participants if the agents are risk averse and the distribution of beliefs is spread out (as with a normal distribution, for example). Justin Wolfers (Wharton) and Eric Zitzewitz (Dartmouth) have obtained similar results, and also include some analysis of prediction market data, in their paper "Interpreting Prediction Market Prices as Probabilities."^[8] In practice, the prices of binary prediction markets have proven to be closely related to actual frequencies of events in the real world.^[9][10]

Douglas Hubbard has also conducted a sample of over 400 retired claims which showed that the probability of an event is close to its market price but, more importantly, significantly closer than the average single subjective estimate.^[11] However, he also shows that this benefit is partly offset if individuals first undergo calibrated probability assessment training so that they are good at assessing odds subjectively. The key benefit of the market, Hubbard claims, is that it mostly adjusts for uncalibrated estimates and, at the same time, incentivizes market participants to seek further information.

A series of laboratory experiments to compare the accuracy of prediction markets, traditional meetings, the Delphi method, and the nominal group technique on a quantitative judgment task, found only small differences between these four methods. Delphi was most accurate, followed by NGT and prediction markets. Meetings performed worst. The study also looked at participants' perceptions of the methods. Prediction markets were rated least favourable: prediction market participants were least satisfied with the group process and perceived their method as the most difficult.^[1]

A common belief among economists and the financial community in general is that prediction markets based on play money cannot possibly generate credible predictions. However, the data collected so far disagrees.^[9] Analyzed data from the Hollywood Stock Exchange and the Foresight Exchange concluded that market prices predicted actual outcomes and/or outcome frequencies in the real world. Comparing an entire season's worth of NFL predictions from NewsFutures' play-money exchange to those of Tradesports, an equivalent real-money exchange based in Ireland, both exchanges performed equally well. In this case, using real money did not lead to better predictions.^[10]

Hollywood Stock Exchange creator Max Keiser suggests that not only are these markets no more predictive than their established counterparts such as the New York Stock Exchange and the London Stock Exchange, but that reducing the unpredictability of markets would mean reducing risk and, therefore, reducing the amount of speculative capital needed to keep markets open and liquid.

Sources of inaccuracy[link]

Prediction markets suffer from the same types of inaccuracy as other kinds of market, i.e. liquidity or other factors not intended to be measured are taken into account as risk factors by the market participants, distorting the market probabilities. Prediction markets may also be subject to speculative bubbles. For example, in the year 2000 IEM presidential futures markets, seeming "inaccuracy" comes from buying that occurred on or after Election Day, 11/7/00, but, by then, the trend was clear.

There can also be direct attempts to manipulate such markets. In the Tradesports 2004 presidential markets there was an apparent manipulation effort. An anonymous trader sold short so many Bush 2004 presidential futures contracts that the price was driven to zero, implying a zero percent chance that Bush would win. The only rational purpose of such a trade would be an attempt to manipulate the market in a strategy called a "bear raid". If this was a deliberate manipulation effort it failed, however, as the price of the contract rebounded rapidly to its previous level. As more press attention is paid to prediction markets, it is likely that more groups will be motivated to manipulate them. However, in practice, such attempts at manipulation have always proven to be very short lived. In their paper entitled "Information Aggregation and Manipulation in an Experimental Market" (2005),^[12] Hanson, Oprea and Porter (George Mason U), show how attempts at market manipulation can in fact end up increasing the accuracy of the market because they provide that much more profit incentive to bet against the manipulator.

Using real-money prediction market contracts as a form of insurance can also affect the price of the contract. For example, if the election of a leader is perceived as negatively impacting the economy, traders may buy shares of that leader being elected, as a form of insurance.^[13]

Other issues[link]

Legality[link]

Because online gambling is outlawed in the United States through federal laws and many state laws as well, most prediction markets that target U.S. users operate with "play money" rather than "real money": they are free to play (no purchase necessary) and usually offer prizes to the best traders as incentives to participate. Notable exceptions are Intrade/TradeSports, which escapes U.S. legal restrictions by operating from Dublin, Ireland, where gambling is legal and regulated^{[citation needed]}, and the Iowa Electronic Markets, which operates from the University of Iowa under the cover of a no-action letter from the Commodity Futures Trading Commission and allows bets up to $500.

Controversial incentives[link]

Some kinds of prediction markets may create controversial incentives. For example, a market predicting the death of a world leader might be quite useful for those whose activities are strongly related to this leader's policies, but it also might turn into an assassination market.

Public prediction markets[link]

There are a number of commercial prediction markets. By far the largest is Betfair which had a valuation in the region of £1.5 billion GBP in 2010.^[14] Others include, Intrade a for-profit company with a large variety of contracts not including sports. The Iowa Electronic Markets an academic market examining elections where positions are limited to $500, iPredict and TradeSports a prediction markets for sporting events. The digital currency Bitcoin is used with the anonymously operated Bets of Bitcoin predictions market.

In addition there are a number of virtual prediction markets where purchases are made with virtual money, these include The simExchange, Hollywood Stock Exchange, NewsFutures, the Popular Science Predictions Exchange, Hubdub - closed 30 April 2010, Knew The News, Tahministan, The Industry Standard's technology industry prediction market, and the Foresight Exchange Prediction Market. Bet2Give was a charity prediction market where real money was traded but ultimately all winnings were donated to the charity of the winner's choice.

Use by corporations[link]

The embedded lists in this section may contain items that are not encyclopedic. Please help out by removing such elements and incorporating appropriate items into the main body of the article. (November 2007)

• The simExchange introduced a perpetual contract that it calls "stocks" to predict the global, lifetime sales of video game consoles and software titles. These stocks do not expire like most contracts on prediction markets because the founder, Brian Shiau, argued that video game sales can continue for years.^[15] The premise for these stocks is that Shiau believes the video game industry suffers from a "lack of comprehensive sales data" and he compares the information problem of a game's sales to the information problem of evaluating a company's market value. Hanson warns that such a system may not work if a connection is not enforced.^[16] Keith Gamble has described the simExchange as a Keynesian beauty contest^[17] and that financial markets have certain remedies such as company buy-outs that cannot happen on the simExchange. Gamble concludes that such a prediction market can work but will be confined to play money.^[18]
• Best Buy, Motorola, Qualcomm, Edmunds.com, and Misys Banking Systems are listed as Consensus Point clients.^[19]
• Hewlett-Packard pioneered applications in sales forecasting and now uses prediction markets in several business units. Mentioned in academic publications from HP Labs. Also mentioned in Newsweek.^[20] It is working towards a commercial launch of the implementation as a product, BRAIN (Behaviorally Robust Aggregation of Information Networks).^[21]
• Corning, Renault, Eli Lilly, Pfizer, Siemens, Masterfoods, Arcelor Mittal and other global companies are listed as NewsFutures customers.
• Intel is mentioned in Harvard Business Review (April 2004) in relation to managing manufacturing capacity.
• Microsoft is piloting prediction markets internally.
• France Telecom's Project Destiny has been in use since mid-2004 with demonstrated success.^[22]
• Google has confirmed that it uses a predictive market internally in its official blog.^[23][24]
• The Wall Street Journal reported that General Electric uses prediction market software from Consensus Point^[25] to generate new business ideas.^[26]
• BusinessWeek lists MGM and Lionsgate Studios as two HSX clients.^[27]
• HSX built and operated a televised virtual stock market, the Interactive Music Exchange for Fuse Networks Fuse TV to be used as the basis of their daily live television broadcast, IMX, which ran from January, 2003 through July, 2004. The television audience traded virtual stocks of artists/videos/songs, and predicted which would make it to the top of the Billboard music charts. The first of its kind, Fuse Network and HSX won an AFI Enhanced TV (American Film Institute) Award for innoviation in television interactivity.^[28]
• Starwood embraced the use of prediction markets for developing and selecting marketing campaigns. Marketing department started out with some initial ideas and allowed employees to add new ideas or make changes to existing ones. Then subsequently incentives based prediction markets were leveraged to select the best of the lot.

Prediction Market Price Formats[link]

The largest prediction market at present is Betfair although it would be extremely difficult to recognise it as a prediction market in the sense that the price formats, on the surface, look nothing like the probability pricing, or binary option^[29], more closely associated with prediction markets. A prediction market might show a price of 38-40 for an event, which in effect means that somebody believes there is a 38% chance of the event taking place, while someone else considers the chance less than 40%. On Betfair the price of 40% is reflected as 2.50 (100/40) and these style of prices are generally seen on continental Europe. In the UK that same price is shown as a fraction 6/4, in itself derivable from the Betfair price minus one, i.e. 2.5 - 1.0 = 1.5 = 6/4. In the US that same price would be reflected as 150, in China as 1.50, etc. with Indonesia, Malaysia and Italy all having their own variations on a theme.

See also[link]

• Election Stock Market
• Futarchy
• Futures exchange
• Policy Analysis Market
• Prediction games
• Binary option

References[link]

Academic Papers[link]

• Bell, Tom W. Prediction Markets For Promoting the Progress of Science and the Useful Arts - PDF file - George Mason Law Review (14 Geo. Mason L. Rev 37) (2006)
• Berg, Joyce E., & Thomas A. Rietz. The Iowa Electronic Market: Lessons Learned and Answers Yearned - PDF file - 2005-01-00
• Erikson, Robert S., & Christopher Wlezien. "Are Political Markets Really Superior to Polls as Election Predictors?" Public Opinion Quarterly 72(2), Summer 2008, pp. 190–215.
• Gjerstad, Steven. "Risk Aversion, Beliefs, and Prediction Market Equilibrium," University of Arizona Working Paper 04-17, 2005.
• Graefe, A. & Armstrong, J.S. (2011). Comparing face-to-face meetings, nominal groups, Delphi and prediction markets on an estimation task, International Journal of Forecasting, 27(1), 183-195
• "Gruca, Thomas S., Berg, Joyce E. & Cipriano, Michael (2005). Consensus and Differences of Opinion in Electronic Prediction Markets." "Electronic Markets", 15 (1), 13-22. DOI: 10.1080/10196780500034939
• Hanson, Robin. The Informed Press Favored the Policy Analysis Market - PDF file - 2005-05-05
• Manski, Charles F. Interpreting the Predictions of Prediction Markets - PDF file - Revised Aug 2005—Manski suggests that there needs to be a better theoretic basis for interpreting market prices as probability, and provides a simple model for this.
• "Rosenbloom, E. S. & Notz, William (2006). Statistical Tests of Real-Money versus Play-Money Prediction Markets." "Electronic Markets", 16 (1), 63-69. DOI: 10.1080/10196780500491303
• "Servan-Schreiber, Emile, Wolfers, Justin, Pennock, David M. & Galebach, Brian (2004). Prediction Markets: Does Money Matter?" "Electronic Markets", 14 (3), 243-251. DOI: 10.1080/1019678042000245254
• Spann, Martin & Skiera, Bernd."Internet-Based Virtual Stock Markets for Business Forecasting" - PDF file - Discusses theory, design options and presents empirical comparisons on forecasting accuracy of prediction markets
• Wolfers, Justin, & Eric Zitzewitz. Prediction Markets - PDF file - 2004-05-00
• Wolfers, Justin, & Eric Zitzewitz.Interpreting Prediction Market Prices as Probabilities - PDF file - Draft version 2007-01-08 - Expands on the work of Manski, providing a more general model wherein it is somewhat rational to interpret market prices as probabilities
• Watkins, Jennifer H.Prediction Markets as an Aggregation Mechanism for Collective Intelligence - Proceedings of 2007 UCLA Lake Arrowhead Human Complex Systems Conference, Lake Arrowhead, CA, 25–29 April 2007.
• Storkey, A.J. Machine Learning Markets - Journal of Machine Learning Research C&WP 15:AISTATS. 2011.

External Resources[link]

• The Journal of Prediction Markets
• Video of Robin Hanson's Combinatorial Prediction Markets lecture at the Uncertainty in Artificial Intelligence conference in Helsinki, 2008
• A comprehensive list of vanilla and exotic binary options which are at the root of prediction markets

This article may require copy editing for grammar, style, cohesion, tone, or spelling. You can assist by editing it. (February 2012)

Max Keiser
Max Keiser in a London taxi
Born	Timothy Maxwell Keiser (1960-01-23) January 23, 1960 (age 52) New Rochelle, New York
Education	NYU
Occupation	Journalist
Notable credit(s)	Hollywood Stock Exchange, People & Power, The Oracle with Max Keiser, Karmabanque
Relatives	German and Scottish Ancestry, Hugh Maxwell, V 1777-1860
Website
http://maxkeiser.com

Timothy Maxwell "Max" Keiser (born January 23, 1960) is an American broadcaster and film-maker. He hosts Keiser Report, a financial program broadcast on RT (formerly Russia Today).^[1] Keiser also anchors On the Edge, a program of news and analysis hosted by Iran's Press TV.^[2] He hosted the New Year's Eve special, The Keiser's Business Guide to 2010 for BBC Radio 5 Live.^[3] Keiser presented a season of The Oracle with Max Keiser on BBC World News. Previously he produced and appeared regularly in the TV series People & Power on the Al-Jazeera English network. He also presents a weekly show about finance and markets on London's Resonance FM, as well as writing for The Huffington Post.^[4]

In addition to his broadcasting work Keiser is known for his invention of "Virtual Specialist Technology", a software system used by the Hollywood Stock Exchange.

Early career[link]

Keiser has been involved with markets and finance for 25 years. He started his career as a stock broker on Wall Street after graduating from New York University.

Hollywood Stock Exchange[link]

Keiser is the creator, co-founder and former CEO of HSX Holdings/Hollywood Stock Exchange, later sold to Cantor Fitzgerald.^[5] Alongside Michael R. Burns, he co-created the Hollywood Stock Exchange, ^[6] which allows traders to exchange virtual securities, such as "MovieStocks" and "StarBonds", with convertible virtual currency, the Hollywood Dollar.

Keiser is also the co-founder of HSX films, which went on to make almost a dozen films including Mixed Signals, Six-String Samurai, Dancer, Texas Pop. 81 and Girl. The company was bought by Ignite Entertainment/Lionsgate.

Broadcasting career[link]

Keiser presented Rumble at the Box Office^[7] for NBC's Access Hollywood. He also produced and hosted the weekly talk show Buy, Sell, Hold for CBS radio's KLSX in Los Angeles. Currently, he presents The Truth About Markets on Resonance 104.4 FM in London and on RDU 98.5 in Christchurch, New Zealand.

[edit] People & Power

Keiser produced ten short documentary films covering aspects of financial markets for Al Jazeera's series People & Power.^[8] The films include Rigged Markets,^[9] Money Geyser,^[10] Death of the Dollar,^[11] Peaked,^[12] Extraordinary Antics,^[13] Savers vs Speculators,^[14] Banking On It,^[15] Private Finance or Public Swindle?^[16] and Focus on Locusts.^[17]

[edit] The Oracle with Max Keiser

A pilot episode was produced for Al-Jazeera English titled The Oracle. This was developed into a series for BBC World News.^[18] The series first aired on 9 January 2009 and ran for ten episodes. It explored financial current affairs from the perspective of prediction markets. It was intended to be a humorous take on financial news before it happens.

[edit] On The Edge

A weekly financial commentary show which started in 2009 and is broadcast on Press TV, featuring interviews with well known alternative economists.^[19]

[edit] The Keiser Report

Since September 2009, Keiser has hosted The Keiser Report with financial news and analysis, on the RT network. The 30-minute program is produced three times a week. Stacy Herbert is the co-host and banters with Max on headlines and commentary.^[20]

An episode broadcast in September 2011 featured an interview with comedienne Rosanne Barr who stated that her solution to the financial crisis was to "bring back the guillotine".^[21]

Financial punditry[link]

Keiser has appeared as a financial pundit on a number of news networks. Keiser called for a "fatwā" against Hank Paulson^[22] on Al Jazeera in response to the Troubled Asset Relief Program (TARP). In a later broadcast Keiser said "Paulson stinks".^[23] Keiser has advised investors to buy silver bullion and physical silver, promoting the metal as a store of value.

Activism[link]

Karmabanque[link]

Keiser founded the hedge fund Karmabanque, which sought to profit from any decline in equity-value of companies that are susceptible to boycott from environmental groups.^[24] The hedge fund's progress was followed monthly in The Ecologist magazine.^[25] Its targets included Coca-Cola^[26] and McDonald's.

The Karmabanque hedge fund project was designed to simultaneously short-sell companies while funnelling profits into environmental and ethical-business pressure groups which further act to drive down the price. Describing the project Keiser stated, "The Internet allows people, activists, from all over the world to gather, or swarm, and hit a company where it hurts most - in their stock price".^[27]

Extraordinary Antics[link]

In the Al-Jazeera short film Extraordinary Antics,^[28] Keiser travelled to Milan and Venice to find out how CIA station chief Robert Seldon Lady and his fellow CIA agents spent $500,000 on a procedure known as extraordinary rendition - a practice which is illegal and caused an Egyptian citizen, who had been granted asylum in Italy, to be abducted in order to face torture in Cairo.

The CIA was prosecuted for the case and Mr. Lady was found guilty in a Milan court. He was sentenced on 9 November 2009 to nine years in prison according to the Guardian.^{[citation needed]} This verdict was upheld on appeal. The US refuses to extradite Mr. Lady to Italy.^[29]

Crash JP Morgan - buy silver[link]

Max Keiser has labeled JPMorgan "the biggest financial terrorist on Wall St" in relation to their alleged manipulation of the price of silver.^[30] Keiser started a campaign called "Crash JP Morgan - buy silver",^[31][32][33] whereby people buy silver, thus raising its price and leaving JPMorgan with a huge short position to cover, the margin of which are collateralized by JPMorgan's own stock price, bankrupting itself. Based on the collateralization of silver by the price of its shares and his allegation that JPMorgan's position is an overwhelmingly large naked short position, Keiser predicted that the a per-ounce silver price exceeding JPMorgan's stock price will not only crash JPMorgan but unsettle the underpinnings of the dollar, which he claims are essentially confetti.

Adweek magazine described Keiser as "the most visible character in an underground movement that has spurred hundreds of blog posts and videos, and played some small part in driving up the price of precious metals".^[34] However, Keiser's prediction that JPMorgan would go bust if silver hit 47 dollars has failed to materialise, drawing criticism from the financial community.

Criticism[link]

• The Guardian newspaper, in an item titled "Mad Max", described Keiser's Karmabanque hedge fund as a "fantastical scheme" and accused him of trying to exist "beyond the normal forces and controls of society".^[35]

• Keiser drew criticism at the 2000 ShowBiz Expo in Las Vegas when he said of media content that "Everything is inescapably going to a price point called free". In response Kevin Tsujihara, executive V.P. of New Media at Warner Bros., commented that "Piracy.com" will be the victor if superior content is available on sites supported by advertisements.^[36]

• In 2005 Steven Milloy, the "Junk Science" commentator, demanded that Keiser be removed from the panel of the Triple Bottom Line Investing conference, where he was scheduled to appear. Milloy accused Keiser of making threats against his organization^[37] and petitioned sponsors Calvert Investments and KLD Research & Analytics to withdraw from the project.^[38] Robert Rubenstein, founder of conference organiser Brooklyn Bridge, stated that Keiser's comments "do not constitute a threat to person or property and are not related to the conference or the content that will be presented there".

• Referring to Keiser's Karmabanque project, a spokeswoman for Ryanair said, "Since they put Ryanair on their list our share price has gone up by 10%. We are always delighted to be part of a list which includes Coca-Cola, Starbucks and Wal-Mart".^[39] However, on the same day The Hindu published an article in which Howard Millar, Ryanair deputy chief executive, admitted that his company may be vulnerable to environmental pressure groups, stating, "I am concerned that there is a continuing media campaign and the concern is that people might say 'maybe I will not fly on holiday and maybe I will make a different choice'".^[40]

See also[link]

Biography portal

• Error account - a term often mentioned by Max Keiser
• Central bank or Reserve bank
• Gold standard - where paper currency is backed up by the value of gold
• Hollywood Accounting

References[link]

External links[link]

• MaxKeiser.com Max Keiser's website
• chaostheorien.de Interview with Max Keiser at chaostheorien.de

This biographical article needs additional citations for verification. Please help by adding reliable sources. Contentious material about living persons that is unsourced or poorly sourced must be removed immediately, especially if potentially libelous or harmful. (July 2008)

Peter Lynch (born (1944-01-19)January 19, 1944) is a Wall Street stock investor. He is currently a research consultant at Fidelity Investments. Lynch graduated from Boston College in 1965 and earned a Master of Business Administration from the Wharton School of the University of Pennsylvania in 1968.

Fidelity[link]

Lynch was hired as an intern with Fidelity Investments in 1966 partly because he had been caddying for Fidelity's president (among others) at Brae Burn Country Club in Newton, Massachusetts.^[2] He initially covered the paper, chemical, and publishing industries, and when he returned after a two-year Army stint he was hired permanently in 1969. This time Lynch was charged with following the textiles, metals, mining, and chemicals industries, eventually becoming Fidelity's director of research from 1974 to 1977. In 1977, Lynch was named head of the then obscure Magellan Fund which had $18 million in assets. By the time Lynch resigned as a fund manager in 1990, the fund had grown to more than $14 billion in assets with more than 1,000 individual stock positions. From 1977 until 1990, the Magellan fund averaged a 29.2% return.^[3] Lynch's achieved dollar successes in a range of stocks including (by order of profit achieved - source is Beating the Street): Fannie Mae, Ford, Philip Morris, MCI, Volvo, General Electric, General Public Utilities, Student Loan Marketing, Kemper, and Lowes.

Books[link]

Peter Lynch has written (with co-author John Rothchild) three texts on investing, including One Up on Wall Street (ISBN 0671661035), Beating the Street (ISBN 0671759159), and Learn to Earn. The last-named book was written for beginning investors of all ages, mainly teenagers. In essence, One Up served as theory while Beating the Street is application. One Up lays out Lynch’s investment technique including chapters devoted to stock classifications, the two-minute drill, famous numbers, and designing a portfolio. Most of Beating the Street consists of an extensive stock by stock discussion of Lynch’s 1992 Barron's Magazine selections, essentially providing an illustration of the concepts previously discussed. As such, both books represent study material for investors of any knowledge level or ability.

Lynch also wrote a series of investment articles for Worth magazine that expand on many of the concepts and companies mentioned in the books.

Investment philosophy[link]

Lynch coined some of the best known mantras of modern individual investing strategies.

His most famous investment principle is simply, "Invest in what you know," popularizing the economic concept of "local knowledge". This simple principle resonates well with average non-professional investors who don't have time to learn complicated quantitative stock measures or read lengthy financial reports. Since most people tend to become expert in certain fields, applying this basic "invest in what you know" principle helps individual investors find good undervalued stocks.

Lynch uses this principle as a starting point for investors. He has also often said that the individual investor is more capable of making money from stocks than a fund manager, because they are able to spot good investments in their day-to-day lives before Wall Street. Throughout his two classic investment primers, he has outlined many of the investments he found when not in his office - he found them when he was out with his family, driving around or making a purchase at the mall. Lynch believes the individual investor is able to do this, too.^[4]

He also coined the phrase "ten bagger" in a financial context. This refers to an investment which is worth ten times its original purchase price and comes from baseball where "bags" or "bases" that a runner reaches are the measure of the success of a play.^[5] A "two bagger" would be a double, so by extension, two home runs and a double would be a "ten bagger".

Philanthropy[link]

Though he continues to work part-time as vice chairman of Fidelity Management & Research Co., the investment adviser arm of Fidelity Investments, spending most of his time mentoring young analysts, Peter Lynch focuses a great deal of time on philanthropy. He said he views philanthropy as a form of investment. He said he prefers to give money to support ideas that he thinks can spread, such as First Night, the New Year's Eve festival that began in Boston in 1976 and has inspired similar events in more than 200 other communities, and City Year, a community service program founded in Boston in 1988 that now operates in 14 locations.

The Lynches give money primarily in five ways: as individuals, through the Lynch Foundation, through a Fidelity Charitable Gift Fund, and through two charitable trusts.

The Lynches have made gifts as individuals, donating $10 Million to Peter Lynch's Alma Mater, Boston College, naming the School of Education after the family.^[6]

The Lynch Foundation, which had $74 million in assets in 2003, supports education, religious organizations, cultural and historic organizations, and hospitals and medical research.

Mr. Lynch was inducted into the Junior Achievement U.S. Business Hall of Fame in 1991.

See also[link]

• Stock selection criterion

References[link]

External links[link]

• Book Reviews: Peter Lynch
• The Greatest Investors: Peter Lynch
• Lynch-Based Stock Screener
• Sayings on markets by peter Lynch
• Peter Lynch Quotes
• "The Wit and Wisdom of Peter Lynch"

Joseph E. Granville (born August 20, 1923), often called Joe Granville, is a financial writer ^[1] and investment speaker. He popularized ^[2] the use of "on balance volume", a technique of technical analysis that attempts to predict future prices of stocks, commodities, and other financial assets traded on financial markets for which historical price and volume information is available.

Granville is probably best known for his bearish market calls during the 1970s, 1980s, and 1990s, when he claimed that the stock market was headed for imminent collapse. His overall track record, according to the Hulbert Financial Digest, is very poor.

The Granville Market Letter "is at the bottom of the Hulbert Financial Digest's rankings for performance over the past 25 years - having produced average losses of more than 20 percent per year on an annualized basis." ^[3]

Nevertheless Granville was known as a great showman ^[4] who would emerge from a coffin at an investment conference, or appear to walk across water (at a swimming pool) when meeting clients. According to Robert Shiller in his book Irrational Exuberance^[5]

His investment seminars were bizarre extravaganzas, sometimes featuring a trained chimpanzee would could play Granville's theme song "The Bagholder's Blues," on piano. He once showed up at an investment seminar dressed as Moses, wearing a crown and carrying tablets. Granville made extravagant claims about his forecasting ability. He said he could predict earthquakes and once claimed to have predicted six of the past seven major world quakes. He was quoted by TIME Magazine as saying "I don't think that I will ever make a serious mistake in the stock market for the rest of my life," and he predicted that he would win the Nobel Prize in economics.

Yet, Shiller states that Granville's market calls were said by major media sources to have caused large moves in the Dow Jones Industrial Average on April 22, 1980 (+4.05%) and on January 6, 1981.

References[link]

1. ^ Joseph E. Granville, Granville's New Strategy of Daily Stock Market Timing for Maximum Profit, Prentice-Hall, Inc., 1976. ISBN 0-13-363432-9.
2. ^ Larry Williams, letters to Technical Analysis of Stocks and Commodities magazine, V. 22:3 (10-14), March 2004
3. ^ Mark Hulbert, "Gambling on Granville", MarketWatch, March 16, 2005
4. ^ Iain Jenkins, International Herald Tribune, June 11, 1994 After Initial Splash, Newsletter Gurus Don't Seem to Last Long
5. ^ excerpt at Harvard International Review, Robert Shiller "Exuberant Reporting," Spring 2001.

External links[link]

• The Granville Letter
• On Balance Volume
• Harvard International Review - Exuberant Reporting Media and Misinformation in the Markets
• Journal of Portfolio Management Spring 1982

Barbara Goldsmith (born 1937) is an American author, journalist, and philanthropist. She has received critical and popular acclaim for her best selling books, essays, articles and her philanthropic work. She has been awarded four doctorates, honoris causa, and numerous awards; been elected to the American Academy of Arts and Sciences, two Presidential Commissions, and the New York State Council on the Arts; and honored by The New York Public Library Literary Lions as well as the Literacy Volunteers, the American Academy in Rome, The Authors Guild, and the Guild Hall Academy of Arts for Lifetime Achievement. In 2009, she received the Knight’s Cross of the Order of Merit medal from the Republic of Poland. In November 2008, Goldsmith was elected a “Living Landmark” by the New York Landmarks Conservancy. She has three children and six grandchildren. The Financial Times declared that "Goldsmith is leaving a legacy—-one of art, literature, friends, family and philanthropy." ^[1]

Author, journalist and philanthropist Barbara Goldsmith.

Early Biography[link]

Barbara Goldsmith—-whose books, noted professor Joan Hendrick of Trinity College, are “thoroughly researched and beautifully written...a brilliant synthesis and masterful biographical writing” ^[2]—-was born in New York City. She received a Bachelor of Arts from Wellesley College, after which she took art courses at Columbia University. Her first assignments as a journalist were in the art field, where she simultaneously amassed an art collection comprising mostly contemporary American painting and sculpture. In her early twenties, she wrote a series of prize-winning profiles of such Hollywood luminaries as Clark Gable, Cary Grant, Joan Crawford, and Audrey Hepburn. In the late 1960s she initiated the “The Creative Environment” series, interviewing in-depth Marcel Breuer, I.M. Pei, George Balanchine and Pablo Picasso, among others, about their creative process.

Goldsmith’s “The Creative Environment” caught the eye of Clay Felker, editor of the Sunday magazine supplement of the New York Herald Tribune. After the Tribune failed in 1967, Goldsmith provided Felker with the money to purchase the name “New York”^[3] and in 1968 became a founding editor and writer of New York Magazine, where she wrote not only about art, but also about the colorful characters in the art world. In the third issue of New York, she wrote a landmark article on Viva, a “superstar” in Andy Warhol films, with accompanying photographs by Diane Arbus. At the time, the article was praised and reviled.^[4] Tom Wolfe called it “Too good not to print”^[5] and honored her with inclusion in his anthology The New Journalism.^[6] When Wolfe called her one of the originators of this movement, Goldsmith said, “I think good journalism is all that counts, not a so-called group.”^[7] Other notable New York articles included her profiles of the Centennial of the Metropolitan Museum of Art and curator Henry Geldzhaler’s emerging artists exhibit, Thomas Hoving, Jamie Wyeth and Andy Warhol.

Goldsmith wrote “Bacall and the Boys” in 1968, a television special about Lauren Bacall in Paris with the then young, unproven avant-garde designers Yves St. Laurent and Giorgio Armani as well as Pierre Cardin and Marc Bohan of Dior. This earned her an Emmy award.

In 1974 Barbara Goldsmith became an adviser to the Hearst Corporation and then Senior Editor of Harper’s Bazaar, attracting top writers to the publication.

Recent Biography & Books[link]

“At magazines I got tired of making other writers look good through my re-writing,” Goldsmith wrote.^[8] Since the mid-1970s, though continuing to write for the New Yorker and the New York Times among other publications, Goldsmith has concentrated on writing books, all of which have brought critical success and become bestsellers.

In 1975 Goldsmith completed her first book, The Straw Man, a novel about the New York art world. The wealthy Royceman family’s private art collection—a hundred million dollars worth of Old Masters, Impressionists, Neo-Impressionists, and objects d’art—has been willed by Bertram Royceman to a New York museum to be housed in a special pavilion. However, Bertie, the only son of Bertram Royceman, files suit to challenge his father’s will. The ensuing battle exposes many of the players in the art world. The book reached #1 on the bestseller lists^[9] and was praised in a review by John Kenneth Galbraith in New York Magazine as “brilliant social criticism.”^[10]

Goldsmith’s second book was Little Gloria...Happy At Last, published in 1980. The nonfiction narrative tracked the 1930s custody battle for Gloria Vanderbilt (Little Gloria, then). The book reached the top of the New York Times and Publisher’s Weekly bestseller lists and was hailed by critics. It was a main selection of the Book of the Month Club and described as a “literary masterpiece...the skill of Proust,” by Alden Whitman.^[11] The book became both a Paramount Pictures film and a major NBC television min-series, Little Gloria... Happy at Last, starring Bette Davis, Angela Lansbury, Christopher Plummer, and Maureen Stapleton. It was nominated for 6 Emmys, including one which Goldsmith won.

Johnson v. Johnson, Goldsmith’s third book, completed in 1987, recounted the longest, most expensive will contest in United States history between Basia Johnson, the widow of pharmaceutical heir J. Seward Johnson, and his children from previous marriages. It, too, became a bestseller and received critical accolades, such as The Washington Post Book World calling the book, “Brilliant and gripping...I hadn't counted on Barbara Goldsmith who somehow persuaded the combatants on both sides to level with her...The accumulated tawdriness seems part of some mythic destiny.”^[12] The New York Times Book Review found it, “Intriguing...a shadowy Gothic family drama.”.^[13]

Goldsmith completed her next book in 1998. Other Powers: The Age of Suffrage, Spiritualism and the Scandalous Victoria Woodhull chronicled the women of the Gilded Age who fought for equality and the right to vote. Centered around the controversial newspaper editor, spiritualist and free love advocate Victoria Woodhull, author Jane Stanton Hitchcock described the work as "a whole vivid and inclusive way of writing history. It’s spellbinding.”^[14] The New York Times’ Richard Bernstein hailed it as an “absorbing, sweeping book...the richness of its narrative, the complex and morally nuanced portraits of its character...You finish it nearly out of breath astonished at the tragic heroism of the flawed character who tried to challenge the American Establishment.”^[15] Other Powers was the finalist for the Los Angeles Book Prize. The book is optioned to become a major motion picture.

Her most recent work Obsessive Genius: The Inner World of Marie Curie has been translated into 21 languages world-wide. The work is based on the workbooks, letters, and diaries of Marie Curie, which had been sealed for sixty years because they were still radioactive. It won the prize for the Best Book of 2006 from the American Institute of Physics and its thirteen affiliated societies, earned Goldsmith the Knight’s Cross of the Order of Merit medal for service to the Republic of Poland in 2009, and will soon be adapted as a major joint HBO/Sony production.

Philanthropy[link]

The President of the Carnegie Corporation, Vartan Gregorian, named Barbara Goldsmith along with David Rockefeller and Brooke Astor on his list of America’s ten most enlightened philanthropists.^[16] Gregorian particularly noted the campaign she spearheaded to convert books and documents to permanent paper lasting 300 years instead of disintegrating in thirty and her securing of $20 million from the federal government for this crucial work.

Her major philanthropic efforts include the donation of two preservation and conservation laboratories at The New York Public Library and at New York University, where she also funds a series of business lectures in honor of her father, Joseph I. Lubin, and a lecture series on preservation and conservation. In 2010 the New York Public Library Services Center, a 126-square-foot (11.7 m²) building with 220 workers, now contains the state-of-the-art Barbara Goldsmith Preservation and Conservation Divisions. She also funded a state-of-the-art rare book library at the American Academy in Rome and a preservation and conservation treatment facility at Wellesley College. She served on the Presidential Commission on Preservation and Access during the William Jefferson Clinton Administration and received the American Archival Association’s top award.

Among her early major philanthropic efforts was the 1968 founding of the Center for Learning Disabilities at Albert Einstein College of Medicine. In 1974, she succeeded with Adele Auchincloss (the late Mrs. Louis Auchincloss) to have the city, state and parks department install safety surf, a cushioning material, under swings and slides in every park and playground in the five boroughs of New York City. Goldsmith has initiated many other anonymous grants.

She founded and funds the PEN/Barbara Goldsmith Freedom to Write Award in order to spotlight writers of conscience in 113 countries who have disappeared, were tortured, or in prison at the time of the awards. In the 22 years since 1987 she has provided this award, 34 out of 37 imprisoned writers have been released, often within months of the award. She helped establish the Core Freedoms Program which confines itself to free expression work in the United States.^[17] Larry Siems, Director of PEN Freedom to Write, declared of Goldsmith, “Her innovative idea and persistence and skill brought all this to fruition.”^[18] The PEN/Barbara Goldsmith Freedom to Write Award was instrumental in starting the campaign that led to the Chinese writer Liu Xiaobo winning the 2010 Nobel Peace Prize.

Selected Awards and Honors[link]

• Barbara Goldsmith received the honor of becoming a New York “Living Landmark” for all she has written and accomplished. This honor also has been presented to Brooke Astor, Jessye Norman, Charlie Rose, Beverly Sills, and Barbara Walters among others. November 2008.
• On May 11, 2009 Goldsmith was honored before 1,000 people at a Lincoln Center ceremony by Literacy Partners for her Lifetime Achievements in the Arts.
• The American Academy of Arts and Sciences elected to make her a member of this distinguished body founded in 1780 by John Adams, James Bowdoin, John Hancock. April 15, 2000.
• Authors Guild Award for Distinguished Literary Achievements, 2007
• Obsessive Genius: The Inner World of Marie Curie won the single prize for the “best book on physics written by a non-physicist” from the thirteen affiliated societies of the American Institute of Physics.
• Knight’s Cross of the Order of Merit medal from the Republic of Poland for her contribution to Polish culture, 2009.
• National Archives Award, also presented to Kenneth Burns, for contributions to American History.
• The New York Public Library honored Goldsmith as a Literary Lion with a group including Toni Morrison, Norman Mailer, Tom Wolfe among others.
• The New York State Council on the Arts.
• Elected to the Council on Foreign Relations.
• Presidential Commission on Preservation and Access.
• Emmy for the CBS special “Bacall and the Boys”.
• Two television Emmys as writer and executive producer for Little Gloria…Happy At Last.
• Other Powers: The Age of Suffrage, Spiritualism and the Scandalous Victoria Woodhull finalist for the Los Angeles Book Prize, 1998.
• Presidential Citation from William Jefferson Clinton, July 15, 1998.
• Presidential appointment to the eight person Presidential Commission for the Celebration of Women in American History, 1999.
• New York Times notable books.
• Association of American Publishers best non-fiction award.
• Boston Globe best book of the year.
• Doctor of Humane Letters, honoris causa, Pace University, 1981.
• Doctor of Literature, honoris causa, Syracuse University, 1981.
• Doctor of Letters, honoris causa, Lake Forest College, 1996.
• New York University Presidential Citation, 1993.
• The Brandeis Library Trust Award for outstanding writing.
• The Guild Hall Lifetime Literary Achievement Award.
• Poets & Writers “Writers for Writers” Award, 1999.

Organizations[link]

• The New York Public Library. Trustee since 1987. Served on Executive Committee, Nominating Committee, Library Policy Committee, Finance & Acquisitions Committee and others.
• American Academy in Rome. Trustee since 1994. Served on Executive Committee, Committee on Fine Arts.
• The Dorothy & Lewis B. Cullman Center for Scholars & Writers. Advisory Board since its inception in 1999.
• PEN (Poets, Essayist, Novelists) American Center. Trustee, Core Freedoms Committee, Executive Committee, Advisory Board, originator of PEN/Barbara Goldsmith Freedom to Write Award.

Bibliography[link]

Books

• Goldsmith, Barbara. The Straw Man. 1975. Farrar, Straus & Giroux, New York. (ISBN 0374270902)
• Goldsmith, Barbara. Little Gloria...Happy At Last. 1980. Alfred A. Knopf, Inc., New York. (ISBN 0394428360)
• Goldsmith, Barbara. Johnson v. Johnson. 1987. Alfred A. Knopf, Inc., New York. (ISBN 0394560434)
• Goldsmith, Barbara. Other Powers: The Age of Suffrage, Spiritualism and the Scandalous Victoria Woodhull. 1998. Alfred A. Knopf, Inc., New York.(ISBN 0394555368)
• Goldsmith, Barbara. Obsessive Genius: The Inner World of Marie Curie. 2005. W.W. Norton & Company, Inc., New York. (ISBN 0393051374)

Selected articles and essays

• “La Dolce Viva,” New York Magazine, April 1968.
• “How Henry (Geldzahler) Made 43 Artists Immortal,” New York Magazine, 1974.
• “Comment on Culture,” Harper’s Bazaar (special arts & literature issue with artist James Rosenquist), editor and writer, January 1969.
• “The Meaning of Celebrity,” New York Times, December 4, 1983.
• “Women on the Edge: The Streetwalker’s Life,” The New Yorker, April 26, 1993.

Selected profiles of the author

• “A Testament of Riches Shared,” by Pamela Ryckman. Financial Times, September 28, 2007. Available online [1].
• “Saving Books From the Paper They're Printed On,” by Eleanor Blau. New York Times, November 27, 1994. Available online. [2]
• New York Social Diary Interview with Barbara Goldsmith, by David Patrick Columbia. Available online. [3]
• Aspen Magazine Profile of Author: “Leading the Way,” by Daniel Shaw. Aspen Magazine, Summer 2005.

External References

• Barbara Goldsmith’s Official Website, http://www.barbaragoldsmith.com
• American Academy in Rome (http://www.aarome.org), Trustee.
• Harper Collins (http://www.harpercollins.com) Chapter excerpt Other Powers: The Age of Suffrage, Spiritualism and the Scandalous Victoria Woodhull (School and book group guide)
• New York Public Library (http://www.nypl.org), Trustee.
• New York University (http://www.nyu.edu/library/bobst/research/preserv/)
• PEN American Center (http://www.pen.org)
• Presidential Commission on the Celebration of Women in America (http://govinfo.library.unt.edu/whc/whcreport.pdf)
• Wellesley College (http://www.wellesley.edu)

Notes[link]

1. ^ Pamela Ryckman, “A Testament of Riches Shared,” Financial Times, September 28, 2007.
2. ^ Other Powers: The Age of Suffrage Spiritualism and the Scandalous Victoria Woodhull, cover quote, Professor Joan Hendrick, Trinity College, 1998
3. ^ http://en.wikipedia.org/wiki/New_York_(magazine)
4. ^ For the import of Goldsmith’s Viva article to the magazine’s reputation for innovative reporting, see “City of Clay,” California Monthly, May/June, 2005.
5. ^ Wolfe, Tom. “The New Journalism.” Harper & Row Publishers, Inc., New York, 1973. (ISBN 0060147075). p. 219.
6. ^ Ibid., p.219.
7. ^ Ryckman, “A Testament of Riches Shared,”Financial Times, September 28, 2007.
8. ^ Interview with David Patrick Columbia, www.newyorksocialdiary.com
9. ^ New York Newsday, May 11, 1975.
10. ^ New York, May 12, 1975.
11. ^ New York Times, August 1980
12. ^ The Washington Post, March, 1987.
13. ^ The New York Times, March 5, 1987
14. ^ Other Powers: The Age of Suffrage Spiritualism and the Scandalous Victoria Woodhull, cover quote, Jane Stanton Hitchcock, 1998.
15. ^ The New York Times, March 1998.
16. ^ The New York Times, December 14, 1997.
17. ^ http://www.pen.org/page.php/prmID/278
18. ^ From Larry Siems to Barbara Goldsmith.