Wednesday, December 06, 2006

Devil Take The Hindmost - Book Review

Devil Take the Hindmost: A History of Financial Speculation

What Is It About?

This book reviews the history of speculation and bubbles in various markets. The book begins with the tulip craze of Holland several centuries back and ends with the mania at the end of the last century. The title of the book as it applies to speculation relates to the idea that it is always the person who last realizes that the bubble has burst who ends up hurt the most.

What Did I Get Out Of It As A New Investor?

The book details how individuals throughout history have ignored reason for emotion. History shows that the only constant is investors getting excited about a new idea or industry and allowing emotion to take over their investing decisions. It is this emotion over reason that allows people to convince themselves that stock prices have no connection or need for underlying value. Understanding this repeated frenzy is helpful to the new investor, as most investors will be confronted with such market mania at least once in their lifetimes.

The Good News

The book provides a good historical overview of the many panics and bubbles that have occurred in markets over the last several centuries.

The Bad News

The book starts out a bit slow as it recounts events of several hundred years past. It is the later chapters that deal with the last century's booms and busts that really shine.

The Bottom Line

Reading this book will provide perspective on market mania and help one to develop an understanding of how to recognize, and hopefully avoid, the next market bubble.

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1 comment:


Financial panics will happen.