When it comes to thinking about why and how the market can be played by
smart financiers, no better book than the historical novel: Extraordinary
Popular Delusions and the Madness of Crowds by Scottish journalist Charles Mackay.
The book was first published in 1841 and is broken
into three subject sections: "National Delusions," "Peculiar
Follies," and "Philosophical Delusions." The author chronicles the economic bubble and
why illustrating the South Sea Company bubble of 1711–1720,
the Mississippi
Company bubble of 1719–1720, and the Dutch tulip mania of the early seventeenth-century.
The reader gets an inside understanding of how speculators can change
the market showing how tulips became the “new gold” of its time. While I am not
a finance guy, I can see how this historical perspective can be helpful in
understanding the trends and how our markets are affected by tried and true formulas. While some of the stories are dated, certain
concepts stay true yesterday, today, and I’d say tomorrow. I can’t say this was the most engaging of
reads for me, but again, finance isn’t my industry. For those looking to understand concepts
through stories of the past, go for it!
Give me a good novel anytime.
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