Guide to Financial Markets

by Marc Levinson

Aimed at a broad audience of business people, investment professionals, students, and general readers, this text provides an overview of the world's financial markets. Coverage includes (for example) currency, bond, securities, equity, futures, and derivatives markets. Syndicated loans and insurance products are not discussed. The volume lacks bibliographical references. Levinson is a former finance and economics editor of The Economist. Annotation ©2007 Book News, Inc., Portland, OR (booknews.com)

Genres: Finance, Economics, Business, Nonfiction, Personal Finance, Money, Reference

250 pages, Hardcover

First published January 1, 2000

About the author

Marc Levinson is an independent historian, economist, and author. He spent many years as a journalist, including a stint as finance and economics editor of The Economist. He later worked as an economist at JP Morgan Chase, managed a staff advising Congress on transportation and industry issues at the Congressional Research Service, and served as senior fellow for international business at the Council on Foreign Relations.

Reviews

[Robert Meyro · Rating 2 out of 5]

Guide: a thing that helps someone to form an opinion or make a decision or calculation.
Unfortunately, I do not believe that this book was so much a guide, as a collection of random examples of financial tools.
I thought that having "The Economist" on the cover would mean this book would at least be useful in improving on existing knowledge of financial markets. This book made me realize that: 1. I have never been properly informed about financial markets while studying economics and/or 2. Authors of financial books may not know material they are covering well enough to clearly organize their thoughts for readers. Financial Markets are definitely not an easy topic to write about, but this book will confuse more than it clarifies.

[Ben Hughes · Rating 4 out of 5]

Excellent overview of financial markets, in a fairly concise and readable book. The following topics are covered:

* Foreign exchange markets
* Money markets
* Bond & International fixed income markets
* Securitization
* Equity markets
* Futures, options, and swaps
* OTC Derivatives

This book is best read not straight-through, but instead as a learning guide for trying to achieve deeper understanding. Finance being quite vast, there's a lot that can't be covered, but I found it quite useful to supplement various YouTube videos to clear up some topics that I wanted to understand better.

I wouldn't say this is for total beginners: you'll get more out of this having some basic understanding of Economics and Finance and the role of capital in a modern economy. If you read The Economist and have always felt weak on the finance jargon, this book is for you. Do be aware, however, that this book is from a UK perspective - though differences in American/European financial markets are usually pointed out quite clearly.

[Kadi · Rating 3 out of 5]

Financial markets exercise enormous influence over modern life. 

What do markets do?
1. Price setting. The price of something is no more, and no less, than what someone is willing to pay to own it. Markets provide a way to determine different items values.
2. Asset valuation. Market prices offer the best way to determine the value of a company, its assets, and property. 
3. Arbitrage. Commodities and currencies may trade at different prices in different locations. Traders can attempt to profit from these divergences, prices move towards a uniform level, making the entire economy more efficient.
4. Raising capital. Companies can use shares, bonds and other instruments to make expansions, build new facilities etc. Individuals can raise capital to buy homes, cars etc.
5. Commercial transactions. E.g. arranging payment for the sale of a product abroad, and providing working capital.
6. Investing. Opportunity to earn a return on funds, and accumulate assets that will provide in the future. 
7. Risk management. Futures, options and other derivatives contracts can provide protection against risks, such as a possibility that a foreign currency will lose value against domestic currency.

Inflation decreases the value of financial assets and increases the value of physical assets, such as houses and machines, which will cost far more to replace that they are worth today. 

Yield is the income the investor receives while owning the investment.
Capital gains are increases in the value of the investment itself, and are often not available to the owner until the investment is sold.

Mutual funds are investment companies, which combine the investments of a number of individuals with the aim of achieving particular financial goals in an efficient way. 
Hedge funds can accept investments from only a small number of wealthy individuals or big institutions. They can focus on one asset rather than diversifying. 
Insurance companies own 1/3 of all the financial assets owned by institutions. 
Pension funds aggregate the retirement savings of a large number of workers. Employer usually sponsors pension funds and you usually don't have control over how those savings are invested. 
Algorithmic traders - high-frequency trading. Computers are programmed to enter buy and sell orders automatically in an effort to exploit tiny price differences.
Other institutions are e.g. banks, foundations and university endowment funds.

[Filipa Pinheiro · Rating 1 out of 5]

Nunca mais acabava isto meu Deus. Livro mais secante que já li na minha vida. Era tudo conceitos

[Farhad Azadjou · Rating 3 out of 5]

یکی از دلایلی که من خوندن این کتاب رو شروع کردم این بود که انتشارات اکونومیست معمولا ساده و روان مطالب علمی گوناگون رو در زمینه اقتصاد و مالی چاپ میکنه. یه جورایی مثل کتاب های دامیز هست. ولی این کتاب به شدت برای خواننده کم تجربه در زمینه بازارهای مالی سخت بود. کلی مفهوم و اصطلاح تخصصی و پیچیدگی بازار که این کتاب رو به نظرم به یک کتاب تقریبا تخصصی تبدیل کرده بود. من ابتدا نسخه زبان اصلی این کتاب رو شروع کردم، ولی به سرعت فهمیدم که بیرون کشیدن اطلاعات از حوزه غیر تخصصی من کار سخت و زمان بری هست. برای همین نسخه ترجمه شده اون رو تهیه کردم و خوندم. نمیتونم بگم ترجمه بد یا خوب بود. این کتاب دارای ترجمه معمولی هست. خیلی از قسمت های کتاب واضح و قابل فهم و قسمت هایی هم هست که قابل فهم نیست(حداقل برای من که نبوده). البته نیاز هست که قید کنم که من مدت تقریبی یک سال هست که با بازارهای مالی کار میکنم و دانش نسبی در این زمینه دارم ولی با این حال به دلیل گستردگی و تنوع ساختارهای بازارهای مالی مختلف، فکر میکنم به دانش بیشتری برای مسلط شدن به همه این مفاهیم لازم باشه.
نکته بعدی که باید بگم این هست که کتاب نسخه زبان اصلی حدود ۳۳۰ صفحه هست و در ۹ فصل نوشته شده که هر فصل اون مربوط به یک نوع خاصی از بازارهای مالی میباشد. در نسخه ترجمه شده، مترجم فقط ۴ فصل که به نظر خودشون مهمترین بازارهای مالی به حساب میومد رو ترجمه کرده، برای همین کتاب به یک کتاب ۱۹۲ صفحه ای تبدیل شده.
در کل فکر میکنم تمام کسانی که میخواهند با بازارهای مالی آشنا شوند و به صورت حرفه ای شروع به معامله گری در این بازارها بکنند، مجبور هستند مدتی سختی یادگیری ساختارها و مفاهیم و عملکرد این بازارها رو به جان بخرند. من فکر میکنم نیاز دارم تا این کتاب رو یک یا شاید دوبار دیگه هم بخونم تا نکات ریز و پایه ای که جا انداختم رو دوباره مرور کنم.

[Chloe Robertson · Rating 2 out of 5]

Coming from someone who, as a child, read the ‘Guinness World Records’ book cover to cover every Christmas, this book was DENSE. Far too dense to be informative and allow for the retention of most of the subject matter.

This book was not an introduction into financial markets as I had hoped, it was slightly more advanced and required a certain amount of prior knowledge. However, through reading it I’ve definitely learnt a few things, so it wasn’t all for nothing!

[Richard Newton · Rating 3 out of 5]

I realised that my knowledge of financial markets was pretty poor. It’s not a topic I think about much but it’s a very important one as the actions in those markets determines a lot about the world. I read this book to rectify that gap, and overall it did that well.

3 stars? I always find books like this hard to grade - it is a thorough introduction, reasonably clearly written, so it achieves what it sets out to achieve so perhaps deserves 5 stars for that. But it’s all rather dry and dull - the subject matter doesn’t help, but even the driest topic can be made engaging by the right author.

I found this book’s level fine, but I did wonder who it was for. For the interested amateur / dabbler / news reader (I.e me) who just wants to know a bit more about financial markets and what people are talking about when they mention things like derivatives, options or exchanges this is thorough - though a shorter book would suffice. But for a professional wanting to understand this business I suspect this isn’t enough.

I also wondered how up to date it is. There is tons of innovation in such markets all the time. Having said that, the fundamentals don’t really change.

Look this all sounds more negative than I intended. So, let me balance that out. This is a good text, written clearly by an evidently knowledgeable writer. I suspect if you want to find out about financial markets this may be the best place to go.

[Caramello · Rating 1 out of 5]

I read this when I was a hype boy. Now im a "thought" boy and think you must have trash sense of reading if you think this is a good book. #notsorry

[Donald · Rating 3 out of 5]

Straightforward explanations of financial terms which clarified some things for me. You might prefer the free Wikipedia to something like this because it's basically a narrow-focused guide. However I bought this edition in 2003 and never got around to reading it until now so I'm not a great source for career advice.

[Nick · Rating 5 out of 5]

A fantastic book if you're after a quick guide to financial markets. I've been working within this space for a while now yet there were some simple products/strategies that i'd never looked for a definition of. With this book i've found out not only how markets have evolved but also some interesting facts that have altered my perception of some of today's most liquid markets. Everything from the fundamentals of equities to the complexities of derivatives - this book sheds light, all be it basic, on it all.

A good reference book for the shelf.

[Alex · Rating 4 out of 5]

A very concise, pragmatic overview of a lot of core financial concepts. Good as a refresher/reference guide after having studied several of the subjects covered. Not quite sure how it would come off as an introduction to the subject (probably not comprehensive enough), but fairly information-rich.

[Taylor · Rating 4 out of 5]

Better to get a hard copy versus listening to it on audio as the info is very dry and hard to listen to. But extremely informative and important for anyone interested in finance and markets

[Sebastian Frank · Rating 4 out of 5]

Enjoyed the chapter on futures, options, and financial derivatives.

[Fearless Leader · Rating 2 out of 5]

Good reference material on financial securities if a bit too oriented towards novices.

[Christiaan Quyn · Rating 3 out of 5]

This book perfectly explains why the modern financial markets have turned further into gambling casinos with most participants fooling themselves into thinking they know what they are doing trying to predict the important but unknowable.

From interest rates swaps to currency exchange markets to credit default swaps, rampant speculation and the large amount of money going into modern financial markets is scary. We saw a glimpse of this meltdown in 2008 and in March 2020 and this book tells us the dangers of such an interconnected system when fear spreads.

I do not agree with the authors views on risk and reward which seems to encapsulate the standard in modern finance and instead feel appalled at how what was initially justified by hedging strategy turned into rampant speculation.

Like John Kenneth Galbraith said “innovation in finance is just another differently packaged form of leverage”. Derivatives are dangerous and much of the global financial markets behave like casinos. I’d rather behave like those old fashioned value investors I relate to, who deploy no leverage, keep their head straight when everyone else has gone bonkers and play out their hand when fear is widespread.

[Hồ Vinh · Rating 2 out of 5]

This book is put to good use, on the occasion of the internet is down and you need to quickly lookup a financial term, plus tons of reference to the early 2000s recession to make your assignment a bit longer. That's that. You are enthusiastic about investment and would like to be equipped with a systematic understanding of how to interact with the financial market? Investopedia could offer a better guide.

Despite having The economics as the publisher, the book as best a glossary with minimally useful insights. I learned that the Fed raises interest rate influencing the exchange rate in turn, but this must be in an Economic 101 course anyway.

The book indeed delivers what it promises, "explains the purposes different financial markets serve and clarifies the way they work."; but it lacks a soul. No narrative to guide the audiences, a repetitive formula such as "institution A was founded in year X", "financial instrument came to a steep decline in the 2000s and Great recession in 2007", and so on.

[Ross Harrison · Rating 3 out of 5]

Knocks the "How they work" portion out of the park. Worthwhile for a technical primer on the various markets

The "Why" portion is a little rote. Covers the proximate causes that lead to the creation and evolutionary steps for each market. Does not address the social value of each market beyond it's utility to participants. I suppose, the utility is assumed to be the value.

[Tutankhamun18 · Rating 5 out of 5]

This was a very good overview of financial markets, how they function, who the different actors are and some little tidbits to their history. It explains the importance of exchange rates, money markets, bond markets, securitisation, international foxed income markets, equity markets, futures and options and derivatives markets.

Exactly what it says on the tin!

[Cova · Rating 4 out of 5]

I expect it to be outdated, and boring. While I was right, it also was a great guide, which explained the timeless concepts in an easy way. It is a good read, but not essential to understanding the financial markets, and I prefer to learn the concepts from inveatiopedia.

[Michael Melnik · Rating 2 out of 5]

Reads like the dictionary. Plenty of defining what different financial terms mean, but very little discussion as to why they exist in the first place. Very little historical context as well. Definitely not for beginners

4/10

[Aleksandra KW · Rating 3 out of 5]

Not a bad book - I just found it dry and academic. Solid overview of the market structure, instruments and players.

[Ernest · Rating 3 out of 5]

Handy guide for people looking to gain a preliminary overview on financial markets and its relevant products.

[Noud · Rating 5 out of 5]

Very nice guide to finance. Comprehensive but extensive

[Đạt Tiêu · Rating 3 out of 5]

Introduce some fundamental stuff on financial market

[Rodrigo Leonardo · Rating 5 out of 5]

Back to fundamentals.

[Louise Nguyen · Rating 3 out of 5]

*I listened to the audio book.

Helpful to fill in some gaps in my knowledge

[Adrian Iswariah · Rating 5 out of 5]

Fascinating - I will reread in 2022

[Sarah Sinclair]

Dry but informative

[Anders Gränfors · Rating 4 out of 5]

A very good overwiev