Devil Take The Hindmost

Suggested by Incassaforte. A bit old (pre-2008), but it covers wild historical speculations and seems interesting.

The book it covers many crises with plenty of quotations, from the South Sea Bubble to Railway Mania to the Japanese bubble, which I found the most interesting.

The common thread in all these crises (and the ones that came later, I would add) is the euphoria of people taking on untenable levels of debt to chase gains, and eventually the market falls. Not a light read, but it teaches a lot. I recognized the same pattern again and again.

I would reread it during a new economic crisis to look for the factors, but it feels a bit too dull for a second pass.

Takeaway: when everyone is hyped and euphoric, taking on more and more risk without paying attention to fundamentals, a crisis is close. Also, the perfect market theory (that prices faithfully track a stock’s value) does not make sense.