Irrational Exuberance: Second Edition

Rating: 4.0/5 Stars
Rank: 185

Having predicted the stock market collapse that began just one month after the first edition was published, he now expands the book to cover other markets that have become volatile, particularly the recently red-hot housing market.

He includes a full chapter on domestic and international housing prices in historical perspective.

Shiller amasses impressive evidence to support his argument that the recent housing market boom bears many similarities to the stock market bubble of the late 1990s, and may eventually be followed by declining home prices for years to come.

After stocks plummeted when the bubble burst in 2000, investors moved their money into housing. This precipitated the inflated real estate prices not only in America, but around the world, Shiller maintains.

Hence, irrational exuberance did not disappear-it merely reappeared in other settings.

Building on the original edition, Shiller draws out the psychological origins of volatility in financial markets, this time folding real estate into his analysis.

He broadens the evidence that investing in capital markets of all kinds in the modern free-market economy is inherently unstable-subject to the profoundly human influences captured in Alan Greenspan's now-famous phrase, "irrational exuberance."

The ultimate solution to this troubling condition, he maintains, would involve better-designed public institutions such as a revamped social security system, new forms of insurance to protect people's incomes and homes, and a broader array of investment options.

As was true of its predecessor, the second edition of Irrational Exuberance is destined to be widely read, discussed, and debated.

Editorials

	Amazon.com
	CNBC, day trading, the Motley Fool, Silicon Investor--not since the 1920s has there been such an intense fascination with the U.S. stock market. For an increasing number of Americans, logging on to Yahoo! Finance is... read full editorial
	The New York Times Book Review, Louis Uchitelle
	No one has explored the strange behavior of the American investor in the 1990's with more authority, or better timing, than Robert J. Shiller. --This text refers to the Hardcover edition.
	David Warsh, Boston Globe
	Thus it is an event of some significance that Shiller has written a crystal-clear and tough-minded critique of the factors that have driven US stock markets to their current levels and called his book... read full editorial

Customer Reviews

	Is the stock market really overvalued?
	(Oakland, CA) April 15, 2000 - 4.0/5 stars
	Professor Shiller's excellent book provides food for thought, addressing the timely question of whether stocks are overvalued. He notes that P/Es are at historically high levels, and that high P/Es in the past have led to ... read full review
	Fundamentals, Fear and Greed
	(Boston) April 20, 2000 - 4.0/5 stars
	These three things move markets and this book is an excellant primer (and that's what it is - a primer)on the last two. The party can not go on forever and Shiller is the Cop at the door reminding us of that. You can tell... read full review
	An analysis all the more chilling for its rigour
	(London United Kingdom) May 5, 2000 - 4.0/5 stars
	Schiller's case rests on a rich mix of quantitative and qualitative research and analysis. (By qualitative, I include his surveys of fund managers with small sample sizes). He challenges a great many points of conventional... read full review

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