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Type of bind: Paperback
Dewey Decimal Number: 332.64509
EAN num: 9780452281806
ISBN number: 0452281806
Label: Plume
Manufacturer: Plume
Quantity: 1
Page Count: 400
Printing Date: June 01, 2000
Publishing house: Plume
Release Date: June 05, 2000
Sale Popularity Level: 3209
Studio: Plume
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Is your investment in that new Internet stock a sign of stock market savvy or an act of peculiarly American speculative folly? How has the psychology of investing changed--and not changed--over the last five hundred years? Edward Chancellour examines the nature of speculation--from medieval Europe to the Tulip mania of the 1630s to today's Internet stock craze. A contributing writer to The Financial Times and The Economist, Chancellour looks at both the psychological and economic forces that drive people to 'bet' their money in markets; how markets are made, unmade, and manipulated; and who wins when speculation runs rampant. Drawing colorfully on the words of such speculators as Sir Isaac Newton, Daniel Defoe, Ivan Boesky, and Hillary Rodham Clinton, Devil Take the Hindmost is part history, part social science, and purely illuminating: an erudite and hugely entertaining book that is more timely yesterday than ever before.
'Entertaining, useful, admirable scholarship . . . Chancellour seems to have read everything.' --Adam Smith, The New York Times Book Review
'Anyone contemplating a stock market venture and certainly anyone now involved should read this book.'--John Kenneth Gailbraith
Amazon.com Review:
'The longest bull market in history' is a term that gets used a lot these days. Since 1990, the Dow Jones Industrial Average has risen some 8,000 points, from around 2,700 in January 1990 to nearly 11,000 today--a boom by anyone's standards, including Edward Chancellor's. In Devil Take the Hindmost, Chancellour takes an entertaining, albeit sobering, look at the history of speculative manias and the mass delusion that surrounds them.
Beginning with the 'tulipomania' that gripped Holland in the 1630s, Chancellour chronicles the formations and irrational euphoria that can inflate markets, from shares of South Sea stock in England in the 1720s to real estate in Japan in the late 1980s. He characterizes the speculative spirit as one that loves freedom, detests cant, and abhors restrictions. From the tulip Colleges of the seventeenth century to the Internet investment clubs of the late twentieth century, speculation has established itself as the most demotic of economic activities. Although profoundly secular, speculation is not simply about greed. The essence of speculation remains a Utopian yearning for freedom and equality which counterbalances the drab rationalistic materialism of the modern economic system with its inevitable inequalities of wealth.
But it's precisely such inevitability that always seems to win out, when 'sharply rising prices followed by sudden panic without cause' bring speculative excess to an abrupt end.
Chancellour makes Devil Take the Hindmost especially relevant to today's U.S. investors by using his analysis of past speculative manias as a lens through which to view the current bull-market binge. No matter what his or her current investment outlook is--bull or bear--anyone with capital to invest would do well to spend a thoughtful weekend with this book. Highly recommended. --Harry C. Edwards
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Rated by buyers 
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E. Chancellor's book doesn't cover the last two `bullae' (the dot.com and the real estate ones), but his analysis of former bubbles gives also a perfect insight into these.
For the author, speculative manias are the Carnivals of capitalism, a `Feast of Fools'. Their essence is a Utopian yearning for freedom and equality by the many in a world dominated by the wealthy few.
He agrees with C. Kindleberger that the bubble process begins with a kind of displacement (a new or an increased profitability of a particular investment), of which the positive feedback results ultimately in euphoria, where all kinds of rationality are wiped from the table. New `investment opportunities' were tulip bulbs, newly discovered or explored continents, canals, railways, aircraft, media (radio, TV), computers and internet.
The bubbles are also symptoms of hubris after the world balance of economic power shifted from one nation to another: the Seventeen Provinces (tulip bulbs), Great-Britain (the South Sea shares), the crash of 1929 after the US took Great-Britain's place as the world's superpower, the Japanese real estate bubble after this country surged to the economic forefront.
Bubble formation needs also a certain particular environment. Socially, self-interest must be the dominating force and, politically, there should be little or no governmental interference in the economic process (laissez-faire).
Other characteristics of bubbles are the phenomenal losses suffered by those who were holding the bag (after the tulip mania, investors recovered 3.5 % of their outlay), political corruption, market cornering and outright fraud (e.g. selling more paper or shares than effectively issued).
E. Chancellour makes a laughing stock of the Efficient Market Hypothesis. He agrees with J.M. Keynes that markets are fundamentally inefficient.
But the anarchic force of speculation should be taken seriously (after the bubble of 1887 only one fifth of the US population kept a regular employment). Its power undermined the Bretton-Woods system of fixed currencies. Therefore, whatever free marketeers may continue to pretend, a State-managed form of capitalism is needed in order to prevent market meltdowns and their dramatic consequences (runs on and collapses of banks and of the banking system, consumer pessimism, recessions and ultimately severe depressions which hurt nearly all citizens).
This book is a must read for all economists and `investors' and for all those interested in the history of mankind.
Rated by buyers -
I very first read "Devil Take the Hindmost" a year or so after it came out and enjoyed it at the time. Now, almost 10 years and two burst bubbles later--tech stocks and housing--I thought I would take a 2nd read of it. This is a very impressive book. Chancellour covers the psychology of speculative manias in a very informative and entertaining fashion. It is true that you need to know some economic theory and stock finance parlance to wade through the book, but the reward is well worth the effort.
What's telling about all of the manias that the author describes is how similar they are to each other. The puffing of tulips, railroads, gold mines, "new era" technology, new "fail-safe scientific" methods of investment, etc. all appear to have similar story lines. First, you have the smiling salesman with his most appealing script crafted to the product. The product is perhaps less relevant. If the product is legitimate, such as railroads, it will be oversold to the point of illegitimacy. If the product is illegitimate, such as salted gold mines, it will be sold as being legitimate. The customer, one of whom is reputed by P.T. Barnum to be born every minute, is the ever present object of the stockjobber's attention. The result is usually disaster for the poor customer--especially if he or she is on the hindmost end of these typically Ponzi style schemes.
Chancellour seems to have a rather wryly ironic, yet gentle, take on the victims of these schemes. Greed, fear, naivete, the psychology of the crowd, etc. all conspire to make the greatest fool out of the investor. Time and time again, reasonably intelligent and some less than intelligent investors get roped into these money making and bankrupting schemes. It says something for the timelessness of human nature and our complete inability to remember anything that history has taught us. John K. Gailbraith used to make the observation that recessions and depressions were necessary to remind people that there is a downside to the business cycle--lest we forget. The downside can be delayed or even moderated by intelligent regulation and fiscal/monetary policy--but never fully ended.
The author takes exception to the rational markets school of economics. The line of thought that markets are "all knowing" in terms of including the exact and correct pricing of financial instruments. Sometimes markets behave in thoroughly irrational and mad manners. Very much like people for some inexplicable reason. Also, sometimes markets are cornered or gamed by powerful players. Chancellour appears to put himself very much in the camp of Keynes in believing that there is a place for sane, well thought out, and sensible government regulation. However, he doesn't appear to think that wild and excessive speculation can ever be fully suppressed and controlled. Rather, the best that can be hoped for is to curb the worst abuses by creating lawful financial markets with appropriate consequences for those who perpetuate such frauds.
Hopefully, this book has found its way into some college courses. Highly recommended for any investor. It may save you a great deal of money and grief. At the very least, it will give a very entertaining and informative view of past financial follies and a warning about the inevitable ones that will come....
Rated by buyers -
After reading this book, I believe all markets, investment schemes etc, are just reflection of crowd behavior and demonstrate group think syndrome. Valuation of assets is controlled not by scarcity of the assets but by how people think these assets are worth and by people who make people think how much the assets are worth. It's been the same for hundreds of years. Subprime for example, highly risky type of loans, securitized and transferred into bonds and rated as investment grade. it is said the risk has been understood, transferred and distributed. and people believed it and bought it. People made people believe in it and made money out of it. isnt it the same case as South Sea bubble and all other cases explained in the book?
Rated by buyers -
Great book in history of Economic manias. like the Tulip mania in, where Tulips were worth more then gold and a home, lol! a great book on historic bubbles! just like the housing bubble going on now!
Rated by buyers 
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I'm fairly shocked by the extensive number of 5 star ratings for this book. This book is quite painful to read, but not because the stories are tragic or the warnings frightening. Though the messages contained within are important, the author rambles incoherently and the extensive use of footnotes is overly distracting. The footnotes for many pages are longer than the primary text and should have been incorporated into the main story line. Chancellour is in need of an editor with an iron fist toward readability.
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