Enhanced descriptions from Syndetics:

In this bold and potentially urgent volume, Robert J. Shiller, a respected expert on market volatility, offers an unconventional interpretation of recent U.S. stock market highs and shows that Alan Greenspan's term "irrational exuberance" is a good description of the mood behind the market. He warns that poorer performance may be in the offing and tells us how we--as a country and individually--can respond.


Shiller credits an unprecedented confluence of events with driving stocks to uncharted heights. He analyzes the structural and psychological factors that explain why the Dow Jones Industrial Average tripled between 1994 and 1999, a level of growth not reflected in any other sector of the economy. In contrast to many analysts, Shiller stresses circumstances that alter investors' perceptions of the market. These include the entry of the Internet into American homes, the misimpression that the aging of the baby-boom generation builds long-term protection into the market, and herd behavior, such as day-trading. He also examines cultural factors, including sports-style media coverage of the Dow's ups and downs and "new era" thinking about the economy. He considers--and challenges--efforts to rationalize exuberance that are based on either efficient-markets theory, narrowly construed, or the claim that investors have only recently learned the true value of the market.


In the most controversial portion of the book, Shiller cautions that a market that is overvalued by historical standards is inherently precarious. Among his prescriptions is an urgent plea to immediately end what he argues are perilous schemes to privatize social security in favor of plans to reform it. He also argues that private pension plans that encourage many people to put their entire retirement funds in the stock market should be modified. And he calls on our savings and investment institutions to take more sensible account of emerging risk-management principles. Shiller's analysis is convincingly documented, and--regardless of the market's future behavior--his book will stand as an important elaboration of why stocks soared and what our investment alternatives are.


Irrational Exuberance is a must-read for pension-plan sponsors and endowment managers in the United States and abroad. It will also be studied by investment advisers, policy makers, and anyone from Wall Street to Main Street who doesn't want to be caught sitting on the speculative bubble if (or when) it bursts.

Table of contents provided by Syndetics

• List of Figures and Tables (p. ix)
• Preface (p. xi)
• Acknowledgments (p. xix)
• 1 The Stock Market Level in Historical Perspective (p. 3)
• Part 1 Structural Factors
• 2 Precipitating Factors: The Internet, the Baby Boom, and Other Events (p. 17)
• 3 Amplification Mechanisms: Naturally Occurring Ponzi Processes (p. 44)
• Part 2 Cultural Factors
• 4 The News Media (p. 71)
• 5 New Era Economic Thinking (p. 96)
• 6 New Eras and Bubbles around the World (p. 118)
• Part 3 Psychological Factors
• 7 Psychological Anchors for the Market (p. 135)
• 8 Herd Behavior and Epidemics (p. 148)
• Part 4 Attempts to Rationalize Exuberance
• 9 Efficient Markets, Random Walks, and Bubbles (p. 171)
• 10 Investor Learning--and Unlearning (p. 191)
• Part 5 A Call to Action
• 11 Speculative Volatility in a Free Society (p. 203)
• Notes (p. 235)
• References (p. 269)
• Index (p. 283)

Reviews provided by Syndetics

Library Journal Review

Taking his book's title and thesis from Alan Greenspan's 1996 description of investors, Shiller (economics, Yale Univ.) studies the current booming U.S. stock market in historical terms. His research into past U.S. and international markets indicates that during every speculative bubble there was always widespread consensus that high valuations were justified by each market's special circumstances. Every large market correction seemed to result from popular consensus rather than specific events or news. Shiller says that past bull and bear markets, though often based initially on sound fundamental reasoning, fed upon themselves to go beyond what the facts justified. He challenges the efficient market theory, demonstrating that markets cannot be explained historically by the movement of company earnings or dividends. He concludes that the current U.S. stock market is a speculative bubble awaiting correction. While the book certainly belongs in all academic business collections, public libraries should also purchase it as a counterweight to the plethora of get-rich-quick investment guides.--Lawrence R. Maxted, Gannon Univ., Erie, PA (c) Copyright 2010. Library Journals LLC, a wholly owned subsidiary of Media Source, Inc. No redistribution permitted.

CHOICE Review

In this timely book, Shiller (Yale) skillfully employs data on market prices, earnings, and dividends to suggest that historically, by any standard, the lofty levels to which common stocks have been carried, at least until recently, are indeed "irrational exuberance" or an old-fashioned mania before the markets once again try to align with performance of the real economy. Moreover, as Shiller points out, not all manias end in a 1929-type crash. As one example, in June 1901, the price/earnings ratio reached 25.2 for the first time. For the next decade stocks bounced around that level and then declined (WW I, of course, intervened). By 1920, however, the stock market had lost 60 percent of its June 1901 real value. A boom followed, ending in the spectacular crash of 1929. This historical perspective is a useful reminder of how long the long run can be for those who argue that stocks are the best long-term investment. Shiller also provides an interesting chapter on the role of the media as a feedback mechanism and skillfully blends the findings of psychologists into the fabric of stock market mania. This thought-provoking and sobering book is a useful reminder that investors need to reassess the volatility in the equity markets. Recommended for public and academic library collections. W. S. Curran; Trinity College (CT)

Author notes provided by Syndetics

Robert J. Shiller is the Stanley B. Resor Professor of Economics at Yale University. Also the author of the award-winning "Macro Markets" as well as "Market Volatility", he lives in New Haven, Connecticut.

(Bowker Author Biography)