If You Are Invested in the Stock Market, Do Not Read This Sentence

Yikes . . . Justin Fox's book The Myth of the Rational Market, which bills itself as a "history of risk, reward, and delusion on Wall Street" is enlightening, but not fun to read -- it has plenty of history . . . chronicling a century's worth of market economic theories, and a huge cast of characters (from Roger Babson to Milton Friedman to Daniel Kahneman to Benoit Mandelbrot) and plenty of delusion . . . with market theories that attributed to swings in value to "spots on the sun" or "animal spirits" or "irrational exuberance" or -- the most popular -- an omniscient and very efficient market . . . but in the end, though the theories of dead economists resurface, and one school of thought quickly succumbs to the next (very much like the field of education) there is still no way to tell the difference between "speculative excess" and an "entirely sustainable boom" . . . in other words, no one knows how to value a stock accurately . . . but though you may lose your shirt in the market, there's still a positive moral in the last paragraph of the book: "the countries that have better-developed financial markets really do better."

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