IRATIONAL EXUBERANCE

ROBERT J. SCHILLER

Broadway Books, 2001, 319 pages, index, preface, figures and tables, bibliography, footnotes, paperback

Reviewer comment:
The author provides figures showing the historical data on stock prices, price-earnings ratios and increases. His history based analysis is excellent. The book was written with the 'dot.com' crash in mind after the great market 'boom' of the 1990's. Obviously he has been ignored as the subsequent greater crashes (financial disaster of 2008) and again (in 2020) prove.

Preface: The author writes: "The need for such a book is particularly urgent today, in view of the widespread and quite fundamental disagreement about the stock market." No doubt, then, what about in 2007-8 and in 2019-2020? He asks: "Why did the U.S. stock market reach such high levels by the turn of the millennium? What changed to cause the market to become so highly priced?" Indeed, What?? Now we can ask again What? but in addition - why has the same situation been repeated? - Are the causes he identified in 2001 intrinsic? are they endemic? David Hay of Evergreen has been urging attention to the continuing market 'bubble' and even titling it 'bubble on bubble' to no apparent avail.

Chapter One -The Stock Market Level in Historical Perspective

Part One- Structural Factors
ChapterTwo - Preciptating Factors: The Internet, theBaby Boom, and Other Events

Chapter Three - Amplifiction Mechanisms: Naturally Occuring Ponzi Processes

Part Two -Cultural Factors
Chapter Four - The News Media

Chaper Five - New Era Economic Thinking

Chaper Six - New Eras and Bubbles around the World

Part Three - Psychological Factors
Chapter Seven - Psychological Anchors for the Market

Chapter Eight - Herd Behavior and Epidemics

Part Four - Attempts to Rationaize Exuberance
Chapter Nine - Efficient Markets, Random Walks, and Bubbles

 Chapter Ten - Investor Learning - an Unlearning

Part Five - A Call to Action
Chapter Eleven - Speculative Volatility in a Free Society