Readers reviews of MARKETS, MOBS & MAYHEM
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I have always been deeply suspicious of crowds and the way they reduce the
individual to a lower intelligence. Perhaps that is why I became a trader with
an approach that focuses on understanding the crowd and profiting from their
emotional mistakes. This book is an anthology of crowd behaviour, covering
markets, panics, fires, lynchings and rumours.
It is a wide ranging collection, loosely tied together with commentary. The
examples chosen are powerful examples of the way individuals lose their way in
crowds. However the book offers few new insights into crowd behaviour and
development. Gustave Le Bons book still provides the essentials, although it
is not as easy to read.
The discussion of booms, bubbles and busts drags out all the usual suspects
from Tulip Mania to the South Sea Bubble. It’s a good read, but not
particularly revealing. It also commits the fundamental mistake that runs
through much of the commentary of these events. It assumes that most of the
people who participated ended up losing money. A more careful analysis of
recent bubbles shows this is not the case. Those who were foolish enough to
buy and hold were wiped out and although there is no shortage of these types
of fools, there are also many participants who turned their paper profits into
fat bank accounts. Markets bubbles provide opportunity rather than a Leeming-like
path of total destruction for all.
This book is most timely in a political sense rather than in terms of markets.
Fear starts panic in a crowd and they easily trample the political rights and
freedoms that distinguish us from the practices of the terrorists. This is the
most important information in this book, but it is a reminder of the
consequences rather than a study of causes and understanding.
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