Editorial Review:
How to Read the Signs of Economic Change-Before They Impact Your Business and Investments Economic and stock-market cycles affect companies in every industry. Unfortunately, a confusing array of anecdotal and conflicting indicators often renders it impossible for managers and investors to see where the economy is heading in time to take corrective action. Now, a thirty-five-year Wall Street veteran unveils a new forecasting method that will help managers and investors understand and predict the economic cycles that control their businesses and financial fates. In Ahead of the Curve, Joseph H. Ellis argues that the problem with current forecasting models lies not in the data, but rather in the lack of a clear framework for putting the data in context and reading it correctly. The book explains critical economic indicators in nontechnical language, identifies and documents the recurring cause-and-effect relationships that consistently predict turning points in the economy, and provides the tools managers and investors need to position themselves ahead of cyclical upturns and downturns. Economic events are not as random and unpredictable as they seem. This book will help readers recognize and react to signs of change that their rivals don't see-and win a sizeable competitive advantage.
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Customer Reviews
Average Customer Rating: 
You do not need a PhD  2008-09-03
To the reviewer who so proudly holds a PhD from MIT and who criticized the author for failing to provide the reader with a model that should unlock all forecasting mysteries. I would like to remind him that the author never claimed that's what he was trying to do with his book? Unless you were reading a different book?
But for those interested in a fresh, exciting way to revisit past possible failures in forecasting, especially which variables used versus which ones we ought to look at, then this is a great business read on the plane or the train or even on your couch like I did. I started reading it and did not put it down. Even though I was only interested in his analysis of consumer earnings as predictable value, it was such an easy read I did not put it down! I found myself on page 182, because I got hungry and I had to eat!
I am a strong advocate of reviewing what did not work, especially if results are used to design policies that will affect citizens. I can see how some economists might take Ellis' book the wrong way. After all, he is not an economist, how dare he tell us what we did was wrong or could be changed!
He is not attacking any theory, he is simply raising some questions. Yes he mentioned a couple of theories, mostly objectively criticizing their shortcoming. He has a great way of identifying possible issues and following his gut feeling like any smart business person does. You can see it in his writing style. I think we could really use such styles in academia, I have a business background, and I am sure that is why his book appealed to me. He gets straight to the point and is VERY logic about getting there.
I really appreciated this book, and I recommend it to teachers eager to challenge their grad students. They could present them with an exciting case study where teams need to forecast say sales or demand for a line of goods. See which team actually comes up with the best fitted results while one team specifically is asked to implement Ellis' approach. Makes for an exciting class and stretches students' mind out of the common mainstream approach. This is how you create innovative environments and graduate creative people and not by getting angry and shooting down new ideas.
M.Chida, Ph.D. (ooops!I guess every body has one these days!)
:o)
The missing piece for people focused on Technical Analysis  2008-08-18
This is an excellent book on the economics that drive the stock market.
This is not a casual read, this book is meant to be studied. Once you get the concepts in the book (real wages drives consumer spending, consumer spending drives the market) you have to download data from various Govt. web sites to keep your own data up to date. Ellis has a site for this book but the last time the charts were updates was on January 2008. You have to keep the data updated monthly.
There was a big down turn in real wages back in Sept. 2007 pointed to a downward market.
There is a lot of insight to be gained from this book. Combine this with Martin Zweig Winning on Wall Street and some Tech. Analysis and you have the entire package. The blog www.investorknowledgebase.org discusses some topics in this book.
Excellent non-technical primer of stock market behavior 2007-12-30
We all want to have as much data as possible when investing in the stock market, but we want to also spend our efforts efficiently. Joseph Ellis gives us an outstanding framework to understand how we can take common, public data and create ways to track the broad market.
Ellis places a very high emphasis on consumer spending, which is not a surprise given that he was Goldman Sachs' lead retail analyst for many years. Without going into significant detail, Ellis shows how a single economic indicator - personal consumption expenditures - plays a significant role in the overall economy and stock prices. Ellis spend the majority of the book outlining the relationships between different variables such as inflation, tax policy, and the S&P to show a different approach of how to analyze economic data.
I left with two key takeaways. First, using charts and year-over-year percentages helps simplify the analysis needed to analyze the stock market. Second, the often-quoted recession fears may be used in a totally different method to make your investing decisions.
Ellis writes in a very simple and readable style. There were a few sections with very technical prose that requires a second reading, but these are few and far between. It is clear that Ellis is extremely knowledgeable and passionate about this book. I think this is a great book for those who want to know more about the overall strategy of the stock market. Seasoned traders may not learn as much from the book, but Ellis' contrarian viewpoints at least allow one to look at market data in a different way.
A good distillation of Economic numbers mumbo jumbo 2007-12-26
Ellis makes his point clear from the beginning - Consumer spending drives the economy. Everything else follows.
- Unemployment's incremental change is effectively meaningless. Very true.
- Capital spending is a REACTION to consumer spending. For many industries, this is true. Some (Semiconductors, pipelines, etc) invest regardless of the market. But these are at the high end of the capital intensive spectrum.
There are other points that are useful. The main drawback is, "Does it work in practice?". The charts looked ok. But there was always 1-2 outliers. This can derail the best strategy.
A few R^2 provided by Ellis were weak. I think this sums up the whole exercise of Macroeconomic projection - it paints such broad brush strokes that its relavance to market buy/sell decisions is tenuous.
As Samuleson said, "The Stock Market has predicted 9 of the past 5 recessions". Ellis takes his own advice and methodologies with a grain of salt, and THAT is what makes this book worthwhile.
Sometimes the obvious is worth repeating  2007-12-24
Mr. Ellis' professional track-record is virtually universally recognized as unassailable. Consistency means everything in investing, and as America's economy of consumption seems prepared to power dive into terrain, Ellis' remarks will be seem either obvious or alarming. After all, the title tells us that it's 'common sense.' And it really is.
If you want drama, watch CNBC. If you want reason, read this book. The entire book is built on painfully obvious observations, so those seeking analytical rigor or "an edge" will be left wanting. But for patient people, this book offers an opportunity to avoid very predictable mistakes at every turn in the business cycle.
Ellis' advice to wake up and get over the "recession obsession" is particularly timely (again) at the end of 2007. As the markets reprice or just write-down the subprime meltdown by tens of billions at a whack, and as we watch consumer spending remain bewilderingly robust while year-over-year increases in credit card delinquency rates hit double digits and unit energy prices reach for records, the old-timers know *exactly* where this is going. So Ellis tells us: don't dwell on recession; accept that it will be recognized (late, by definition) and position yourself (now!) for the recovery.
Ellis' style is very readable, not always persuasive on the details (again, the lack of rigor) and mostly obvious. But if you didn't get it the first time around, you need to buy this book. Finally, the companion website -- which is free -- will be of interest to (and a timesaver for) many armchair investors.
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