Book: how the power of the masses drives the market

[Abiel 474]

Charles Mackay's famous 1852 book, "Memoirs of Extraordinary Popular Delusions and the Madness of Crowds" is perhaps the most often cited in discussions of market phenomena, from the tulipmania in 17th-century Holland to most every bubble since. The story is a familiar one: an enduring bull market in some commodity, currency or equity leads the general public to believe the trend cannot end. Such optimistic thinking leads the public to overextend itself in acquiring the object of the mania, while lenders fall over each other to feed the fire. Eventually, fear arises in investors as they start to think that the market is not as strong as they initially assumed. Inevitably, the market collapses on itself as that fear turns to panic selling, creating a vicious spiral that brings the market to a point lower than it was before the mania started, and from which it will likely take years to recover. (from How The Power Of The Masses Drives The Market

 

Download the 3 volumes of "Memoirs of Extraordinary Popular Delusions and the Madness of Crowds" (public domain) from gutenberg.org