Even Professors need a second income
When I obtained this book, I figured it had information about both investments and the economy. Like any other book of this type, I always ask, "How can I be a better investor or what new information can I learn about the economy". The book cover explained the book would be about bubbles such as the real estate and housing bubble.
Unfortunately, I was seriously disappointed in a book written by a Yale University professor. In the beginning and throughout the book, Mr. Shiller explains more about surveys that he did. In one case, he was very proud of the way he did his survey. Apparantly, he can ask the right question to get the right answer. I could never figure out how useful these surveys were but they seem to make good fillers for a book.
The book become briefly interesting around page 100. Yes! Page 100. At this time he introduces unlikely investors in previous bubbles such as hotel waiters, etc. This is a good point since my own experience has suggested unlikely investors in all bubbles. In the 30's it was the shoeshine boy, in the late 70's it was the priest, and the late 2000's it was the sports figures.
Again, the book becomes interesting around page 200 for a discussion about regulation. This discussion was very shallow and never really mentioned the real cause of the housing meltdown. My own analysis always suggested former President Clinton started it and then was allowed to continue unchecked my fellow democrats. In the index of the book you can find Clinton's name mention once. I would say -- not good research for a professor. However, Mr. Shiller is good at conducting surveys.
Towards the end of the book, I figured this is a second edition so he must be like a movie producer trying to profit off his first success. Later, I figure the professor is like any one else trying to make a living -- just slap something together and it might sell! In the end, was I a better investor because I read the book -- No. Did I learn anything new (and useful) regarding economics -- No. If you have to read it, borrow the book from the library.
Rational exuberance
This book does not quite work because the author gives us no algorithm to determine when the market is irrationally exuberant or merely going up.
Great Book for the Times
This book tries to get at the heart of what causes bubbles. Schiller is honest that there is no one cause that can be purely attributed the to building of a financial bubble nor does he contend that the bursting of a bubble can be predictable. He uses examples from all the major stock market crashes from the past century. Part of focus is on the media and its influence on the generals public attitude towards various asset classes, mostly stocks and housing. Its a great reference to have if you think another bubble is on the verge of building as the book cites repeated themes that can be seen in the media that occurred in other bubble creation.
Great read. Won't get your rich (at least now) because we just missed one of the largest bubbles ever to be seen in housing. However, if humans are still running the world for the next 50 years be assured we'll have some more bubbles to come.
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