The Myth of the Rational Market

The Myth of the Rational Market

A History of Risk, Reward, and Delusion on Wall Street

eBook - 2011
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Examines the rise and fall of the efficient markets theory, the development of modern finance, and the rise of behavioral economics, in an account that draws on interviews while demystifying the ideas that forged the modern market.
Publisher: New York : Harper Business, 2011, c2009.
Edition: 1st Harper Business pbk. ed.
ISBN: 9780061885709
0061885703
Characteristics: 1 online resource (xvi, 390 p.)
Contents: Introduction: It had been working so exceptionally well
Early days: Irving Fisher loses his briefcase, and then his fortune ; A random walk from Fred Macaulay to Holbrook Working
The rise of the rational market: Harry Markowitz brings statistical man to the stock market ; A random walk from Paul Samuelson to Paul Samuelson ; Modigliani and Miller arrive at a simplifying assumption ; Gene Fama makes the best proposition in economics
The conquest of Wall Street: Jack Bogle takes on the performance cult (and wins) ; Fischer Black chooses to focus on the probably ; Michael Jensen gets corporations to obey the market
The challenge: Dick Thaler gives economic man a personality ; Bob Shiller points out the most remarkable error ; Beating the market with Warren Buffett and Ed Thorp ; Alan Greenspan stops a random plunge down Wall Street
The fall: Andrei Shleifer moves beyond rabbi economics ; Mike Jensen changes his mind about the corporation ; Gene Fama and Dick Thaler knock each other out
Epilogue: The anatomy of a financial crisis.
Summary: Examines the rise and fall of the efficient markets theory, the development of modern finance, and the rise of behavioral economics, in an account that draws on interviews while demystifying the ideas that forged the modern market.

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JoseRaez
Aug 05, 2017

This is a good book that takes the reader through the history of the efficient market theory, including the academic debates that economy professors engaged throughout the 20th century. Sometimes, the book feels more like an academic review of the subject matter, making it a cumbersome reading experience. The book end with the 2008 financial crisis, making clear that the efficient market theory (which contends that the market knows best and all assets are properly priced based on intrinsic values) was not a useful approach for society and participated in the creation of bubbles. The book is worth reading if you want to get an in-depth knowledge of economics and finance in the 20th century.

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