In The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street, Justin Fox explores the world’s most influential investing idea—the “efficient market” theory—bringing to life the people and ideas that forged modern finance.
The efficient market hypothesis—long part of academic folklore but codified in the 1960’s at the University of Chicago—has evolved into a powerful myth. It has been the maker and loser of fortunes, the driver of trillions of dollars, the inspiration for index funds and vast new derivatives markets, and the guidepost for thousands of careers. The theory holds that the market is always right, and that the decisions of millions of rational investors, all acting on information to outsmart one another, always provide the best judge of a stock’s value. That myth is crumbling.
The Myth of the Rational Market chronicles the rise and fall of what Yale professor Robert Shiller calls “one of the most remarkable errors in the history of economic thought,” while also uncovering the new ideas that will drive the market for years to come.
Praise for The Myth of the Rational Market:
“Do we really need yet another book about the financial crisis? Yes, we do—because this one is different. Fox’s book is not an idle exercise in intellectual history, which makes it a must-read for anyone who wants to understand the mess we’re in.”— Paul Krugman, New York Times Book Review
“His analysis is singularly compelling, and the rare business history that reads like a thriller . . . . A must-read for anyone interested in the markets, our economy or government, this dense but spellbinding work brings modern finance and economics to life.”—Publishers Weekly (starred review)
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