Markets, Mobs, and Mayhem: A Modern Look at the Madness of Crowds

Rating:
Summary: Very disappointing
Review: After reading "Devil Take the Hindmost," which deals very intelligently and thoroughly with investment bubbles of all kinds going back to the South Sea Bubble, I was very much looking forward to reading this book, particularly as it has been written by a very successful stock market investor. I was, however, sadly disappointed.

The author expends virtually all of his efforts discussing mob behavior, but rarely in the context of investments and market madness, i.e., most of the examples he uses relate to Ku Klux Klan activities, the French citizens' attack on the Bastille, the Watts riots and other such emotional mob activities. While these are often interesting and sometimes horrifying, they have only tangential bearing on market manias and investment fads. Furthermore, most of the text has been copied and pasted from reports on these activities that were written by others.

As an investment professional (and having invested in the market myself for over 35 years), I have long believed that, at least in the short term, market prices are dictated as much by psychology as by fundamentals such as profit growth, investment return expectations, balance sheets, business strategies, profit margins, competiting products and services, interest rates and such. And I thought the book would provide at least a few insights into investor psychology and how it moves markets; certainly a thorough discussion of the Dotcom and tech manias of recent years would have been a very apt topic for discussion.

Alas! There was no discussion at all about these issues of investment psychology; rather, the author was content to provide example after example of how, many times in the past, mobs are capable of taking on a life of their own and engaging in group-think, abandoning analysis and rational decision-making. Well, I guess we already know that. We are left on our own to try to figure out how "collective mob behavior" infects investors' psyches and affects the movement of stock prices.

Readers who would like a lot more insight into that process should buy "Devil Take the Hindmost," and not waste their time or money on this book.

Ralph

Rating:
Summary: Disappointment
Review: Amazon offered Menschel's book at a combination price with Taleb's Fooled by Randomness. Mistakenly, I expected both to provide stock market guidance. Taleb's book had little and Menschel's has less.

Rating:
Summary: a waste of time
Review: This is compilation of stories about crowd behavior, amusing at times, but with little or no insight, except that you should not panic. Everybody already knows that and besides it is not always true. In a stock market crash it is better to panic sooner rather than later. Also, I recall that a number of people in the WTC horror died because they decided to stay put in their offices rather than to rush down. But what I really don't like at all about this book is that it is marketed as a book for investors. This is nonsense. It is a book of stories about crowd behavior with no analysis except, as noted, the completely one-sided recommendation that you should not go along with the crowd.

Rating:
Summary: Disappointment
Review: This is not a book for the masses. It won't make you rush out and buy anything. It probably won't even change your life in any substantial way. But it will make you think. And it might just prevent you from being victimized by the latest fad or swept away by the next hysteria. Most readers, I suspect, have heard of the tulipmania or the South Sea company madness, but this book gives a brief survey of the lesser known, or lesser recognized, panics or manias, including those that have nothing to do with financial markets. I found it stimulating reading, laced with a little humor.

The book's message, if internalized, operates like a Segway scooter applied to the business world. It should keep you on an even keel. And in the often topsy-turvy world of Wall Street finance (or just life in the 21st Century), it really helps to have an internal gyroscope or automatic stabilizer that keeps you from falling over every time you hit a bump in the road.

It's not a book for the masses. But that's probably just the point. Next time you want to rush out and join the herd, it might help to read, or reread, this book.