Summaries and Customer Reviews are supplied by Amazon.com
Summary:
Sequels often disappoint when compared to their predecessors, but author Robert Shiller has proved the exception to the rule with his second edition of Irrational Exuberance. When the original book released in 2000, Shiller's prescient analysis of bubble-like market behavior provided perspective on the painful meltdown of stock-price valuations that subsequently occurred. Five years later, the Yale professor's bearish predictions about real-estate valuations are enough to give any savvy investor or homebuyer pause.
Shiller is one of several well-known economists and pundits who've begun a running dialogue in the last few years around the drawbacks of unchecked free markets. Few writers, though, dissect the phenomenon of bubble behavior as clearly and thoroughly as Shiller does. As with the first edition of his book, Shiller begins this one with reams of quantitative data around the late 1990s stock-market runup. This new edition adds data on real-estate price trends in the early 2000s, and points out the striking parallels between the earlier stock-market boom and bust, and current trends with housing prices in the United States. Shiller actually believes the two phenomena are related; as investors lost confidence in the stock market and moved their money into real estate, one asset class fell while the other rose. According to Shiller's analysis, the pattern is destined to repeat itself.
Aside from the initial data, the real strength of Irrational Exuberance is the straightforward, almost clinical way in which it explains why things happen as they do. The book walks readers through structural reasons for market bubbles, then ventures into "softer" analyses which professional economists less confident than Shiller would be scared to touch. It examines cultural factors behind market bubbles, such as hype-mongering news media, and psychological factors, such as herd behavior.
Another improvement in this latest edition of Shiller's book is his inclusion of more personal commentary, and he mentions the influence that his wife, herself a clinical psychologist, has had on his intellectual development and his view of psychological impacts on economic behavior. Other personal insights from Shiller center on experiences he had while touring and lecturing around the first book, and some of the most interesting passages are those in which he describes common questions or feedback from his audience, and what he thought in reaction--but didn't voice while on his tour.
In the end, Shiller closes his book with an intriguing set of policy proposals. He argues for a revamping of the U.S. social security system, a new system of house-price insurance for homeowners, and risk reduction through portfolio diversification. Fans of the brainy academic will note with approval that Shiller practices what he preaches: he has begun trying to implement some of his ideas in the real world through two private consulting firms he has founded, Macro Securities Research and Macro Financial. The hope is if Shiller's as correct with this second book as he was with his first, readers will all learn something from these new companies. --Peter Han
Customer Reviews:
Average Customer Rating:
Even Professors need a second income
Customer Rating:
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
Customer Rating:
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
Customer Rating:
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.
This phrase will live in infamy
Customer Rating:
Great book based on the phrase spoken by Greenspan to try and slow down the economy.
not much food
Customer Rating:
not much food in the book overall..a very shallow and general talk, but i found it interesting to see his comments (p220) on the interest rate and other potential risks in the mortgage market back in 2005. some of the points he mentioned are indeed drivers of the recent subprime meltdown
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