The Myth of the Rational Market : A History of Risk, Reward, and Delusion on Wall Street (Hardcover)--by Justin Fox [2009 Edition] ISBN: 9780060598990

by Justin Fox

Hardcover, no date

Call number

332.64 F

Collection

Nonfiction

Genres

Business

General Nonfiction

History

Publication

Justin Fox (no date)

Description

Examines the rise and fall of the efficient markets theory, the development of modern finance, and the rise of behavioral economics, in an account that draws on interviews with top thinkers while demystifying the ideas that forged the modern market.

User reviews

LibraryThing member slothman

Time Magazine’s Curious Capitalist takes a look at the history of the efficient-market hypothesis— the notion that market prices reflect aggregate wisdom— in the past century. He livens up the discussion of economics by highlighting the characters involved, bringing much-needed color to

discussion of the dismal science. The history shows how the idea developed in academia and found expression in finance, until burgeoning contradictions from the real world began to undermine the notion that we can just leave unregulated free markets to solve all our problems, and points the way to new developments in behavioral economics that help to explain the past and may help us to guide the future. He closes with a moderate perspective:

Where does this leave us? It leaves us with a need to find ways to temper speculative excess while acknowledging that we won’t necessarily be able to distinguish speculative excess from an entirely sustainable boom. Financial regulation will be part of that. A rediscovery of ethics and integrity ... will play a role, too, one hopes. So will memory...

If the events of recent years haven’t already convinced you that rational markets belong to the same domain of idealized tools as frictionless surfaces, massless pulleys, and perfect blackbodies, this will provide you with plenty of food for thought. If you already thought that, it’s a good history of a major current in the economic and financial thinking of the past century.

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LibraryThing member aleph123

Interesting historical review of the evolution of financial markets, with a behavioral bent that reminded me of the courses delivered by Prof. Shiller (Yale, see oyc.yale.edu, now a Nobel laureate); every model is an abstraction made by people who decide what is relevant ;)

And people, even

economists hiding behind formulas, are a constant confirmation of Cipolla's Laws of Human Stupidity: a pile of degrees will not spare you from being conned or deceived- even by yourself, moreover in a "science" (as criticised by an LSE professor from Eastern Europe) where you can not only chose, but even make your own facts

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LibraryThing member AlanEJohnson

This is an excellent analysis of financial and economic matters. I read the 2009 HarperCollins Kindle e-book edition rather than the 2011 Harriman House Kindle edition listed here. I do not know whether the later edition made any changes to the earlier edition, but I suspect that the two editions

are substantially the same, if not identical, in their contents.

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LibraryThing member TanyaRead

A good history of theory on how the stock market works (or doesn't) and how various people have tried to prove their theories. There is a fair amount of humor in it - not laugh out loud but rather what I think is called dry humor or tongue in cheek humor. I didn't expect that in a book about the

market.

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LibraryThing member Dilip-Kumar

A topic of absorbing interest among boys who have grown into men, has been the possibilities of beating the stock market in western capitalist free economies. The author takes us through an absorbing and competent journey, from the early economists like Adam Smith and Ricardo, rhrough the

nineteenth-century mathematical students of probabiulity and prediction, the 20th-century periods of despair and optimism between and during the two great world wars, and so to the modern age of computers and financial whizz-kids who almost succeeded in destroying the whole financial system. One is impressed by the author's wide knowkedge of the major and minor actors and scholars over these few centuries, and also by his seeming deep understanding, at both the theoretical and the practical levels, of what is to most of us an imcomprehensible mine-field of obscure jargon and lies dressed up as half-truths. A truly erudite and comprehensive introduction to the subject, it can well form a road-map to anyone intending to study it in more depth.

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