Andrew Sarlos, financier, friend of tycoons, and benefactor of his native Hungary, died in March this year, his final testament a book of gloomy prophecy. In it, he forecasts that the roaring stock markets of the 1990s will end, taking down the fortunes and conceits of those who helped it rise.

Fear, Greed and the End of the Rainbow is arguably one of the best financial books of the late 20th century, in a league with Burton Malkiel’s A Random Walk Down Wall Street (which argued that capital markets have no observable, dependable patterns on which one can profit). Of fundamental importance, rich with intelligence, market insight, and advice, Sarlos’s book is an oracle of what is to be.

His thesis is familiar in the doom biz: mutual funds bought by market virgins have driven up the prices of stocks far beyond what their dividends or earnings justify. Sarlos’s reasoning adds weight to mere pessimism. He says the great reckoning is ahead if and when Japanese institutions stop buying U.S. bonds and injecting cash into what would otherwise be a moribund U.S. capital market. Baby boomers, due to retire into the early 21st century, will be withdrawing their capital. And if there is a genuine industrial recovery (meaning real wages start rising after a 20-year slump), then money will be taken out of stocks and put into consumer durables – that is, drawn out of Wall Street and put back on Main Street.

The alternative, that at this time markets are truly different and disinclined to crash, rests on the view that capital markets have been globalized and that any bargains on Wall Street or Bay Street will be snapped up by eager European or Asian institutions. This is the theory of international momentum – there is so much wealth moving around the world that stock gains have become self-sustaining and beyond being wrecked by panic. Sarlos rejects the thesis and insists that gravity will prevail.

Patricia Best, the recently appointed editor of The Globe and Mail’s Report on Business magazine, appears to have eased Sarlos’s ideas into a smooth text. But it is not without some bumps. The book rambles into redundancy, rerunning some arguments already well made. There are few specific citations to interesting articles, no notes or explanations as to the accuracy or history of some of the gurus Sarlos quotes.

Readers deserve to know the investment records of sources – a few gold bugs cited have given only misery to their clients. Economist John Kenneth Galbraith, much quoted by Sarlos, is known for hindsight and epigrams, not for having anything specific to predict about capital markets. Nevertheless, Sarlos and Best have created a provocative, immensely readable book. It’s an essential for every investor.