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Essay / Research Paper Abstract
This is a 5 page book review of Robert Shiller’s “Irrational Exuberance” (2000). The publication of Robert Shiller’s book “Irrational Exuberance” in 2000, took investors by surprise as it was a criticism and analysis of the recent increased trends in the stock markets. Essentially, Shiller states that the increase in the stock markets is a result of several cultural, sociological and psychological elements and not based on an increase of “real value”. He admits that there are many factors involved, including the introduction of the Internet into American homes and an increased awareness of the stock market in the media, but he ascertains that the real increase in based on the “herding” effect of social rational humans who follow popular trends. Despite the increase in the markets, Shiller cautions investors to keep their portfolios diversified and not dependent on the stock market because based on past historical increases in the market, this increase will also be followed by a decade of mediocre returns. Because of this good advice and words of caution, the book is considered worthwhile to read especially for anyone considering loading their investments into the stock market.
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Page Count:
5 pages (~225 words per page)
File: D0_TJShill1.rtf
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Unformatted sample text from the term paper:
stock markets. Essentially, Shiller states that the increase in the stock markets is a result of several cultural, sociological and psychological elements and not based on an increase of "real
value". He admits that there are many factors involved, including the introduction of the Internet into American homes and an increased awareness of the stock market in the media, but
he ascertains that the real increase in based on the "herding" effect of social rational humans who follow popular trends. Despite the increase in the markets, Shiller cautions investors to
keep their portfolios diversified and not dependent on the stock market because based on past historical increases in the market, this increase will also be followed by a decade of
mediocre returns. Because of this good advice and words of caution, the book is considered worthwhile to read especially for anyone considering loading their investments into the stock market.
Robert Shillers recent book "Irrational Exuberance" based on a term coined by Alan Greenspan has been widely well received because of its unconventional interpretation
of the recent U.S. stock market highs. Shiller warns that a depressed performance may be ahead in terms of the market and his book attempts to educate the American population
how to best respond (Irrational Exuberance, 2002). During the period between 1994 and 1999, the Dow Jones Industrial Average tripled which was not reflected in any other aspects within
the market. Shiller maintains that there are several structural and psychological elements which were combined to alter investors perception of the market and the economical state of the world. Among
these elements were included the introduction of the Internet into homes across the country as well as world wide, a misrepresentation that the aging baby boomer market allows for a
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