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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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