The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street
By Justin Fox
3.5/5
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About this ebook
“Do we really need yet another book about the financial crisis? Yes, we do—because this one is different….A must-read for anyone who wants to understand the mess we’re in.”
—Paul Krugman, New York Times Book Review
“Fox makes business history thrilling.”
—St. Louis Post-Dispatch
A lively history of ideas, The Myth of the Rational Market by former Time Magazine economics columnist Justin Fox, describes with insight and wit the rise and fall of the world’s most influential investing idea: the efficient markets theory. Both a New York Times bestseller and Notable Book of the Year—longlisted for the Financial Times Business Book of the Year Award and named one of Library Journal Best Business Books of the Year—The Myth of the Rational Market carries readers from the earliest days of Wall Street to the current financial crisis, debunking the long-held myth that the stock market is always right in the process while intelligently exploring the replacement theory of behavioral economics.
Justin Fox
Justin Fox is editorial director of the Harvard Business Review Group, and a contributor to Time magazine and PBS's Nightly Business Report. Previously, he was a columnist at Time and an editor and writer at Fortune. He lives in Cambridge, Massachusetts, with his wife and son.
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Reviews for The Myth of the Rational Market
17 ratings3 reviews
- Rating: 5 out of 5 stars5/5This 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.
- Rating: 4 out of 5 stars4/5Interesting 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
- Rating: 4 out of 5 stars4/5Time 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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