The book without the last 2-3 chapters is worth 5 stars. The entertainment value is huge. The last three chapters were a bit boring -- maybe because the focus changed from fraudsters and industry millionaires to policy makers and large groups of anonymous brokers? Or maybe I just prefer pre-post-modern history... -- and the language became more Academese. It took me some time to process the text, as the author likes to use a lot of complicated words where simpler ones would have sufficed. ( )

Although this book came out back in 1999, it is still the best history of speculation that I have come across.

Backdrop to the book: in what circumstances is speculation positive for a society? In what situations is it negative?

One of the first things that Chancellor establishes is that, although, at the extrema, "speculation" (stereotypically harmful) and "investment" (stereotypically beneficial) can clearly be differentiated, like most things, most of the economy lives in the murky middle, where there is a mix of both.

There is another way to look at speculation though (which, again, is helpful in some instances and inappropriate in others): that it is only with speculation that we get anything new. There is no such thing as zero risk, but if we're always minimizing risk, we're maximizing stasis (which, in its own way, ends up creating existential crisis). In other words, there is absolutely a utility to some forms of speculation (although this argument can get overblown).

One of the things that I found most stunning about the book is how severe some of history's bubbles have gotten. Did you know that, during the South Sea bubble in London in the early 1700s, that the entire economy basically slowed to an idle as a significant portion of all investable funds we're dumped into the stock of one company? Hundreds of merchant vessels just sat, unused, down at the docks, as no one was willing to forgo investing in the South Sea Company to fund merchant activity. There are numerous examples like this throughout the book. One of the takeaways: cryptocurrency has not yet seen a bubble anything like on this scale yet...

Chancellor does an expert job tracing the parallels between various bubbles (and the countless times nations have stated: "this time it will be different"). The Tulip Mania in the Netherlands in the 1600s was very much like the bubble in Japan in the 1980s for example (swap tulips for golf memberships).

In reading the book, I'm reminded of David Flemming's emphasis on the core importance of "carnival" to a healthy society. For a society to have any stability, it needs to regularly experience moments of inversion, where up becomes down, where peasants can become kings (and kings peasants). In this way, speculative bubbles serve a foundational societal purpose: to show that anything really is possible (for a time). Better to be a millionaire and a pauper than just humdrum middle-of-the-road all of your life...

Looking to speculate? Chancellor will help you brush up on tell-tale "top" and "bottom" signals, and help keep your aspirations sober. ( )

A good interesting book that was strongest in the first half. The second half, especially the part about "Kamikaze Capitalism" starts to feel a bit bloated and unfocussed, which is very much a pity as there's a lot of gold in there. I had to keep checking the copyright date to confirm that it was, in fact, written a decade before the 2008 financial crisis, as he spends a fair amount of ink on the derivative market and its risk of bringing down the global economy. So it's really a pity that that portion of the book seemed a bit scatterbrained. Still, very much worth the time to read (and the $7 overdue fine I'll be paying for the privilege.) ( )

A super book - especially when read alongside "This time is different". As Barton Biggs said, " a truly insightful study of speculation and bubbles". The book really gives a sense of the mania and how it was at the time. It also shows that the lessons are never learned and that we will experience speculative bubbles in the future. The author drops a few hints that he is less than enamoured with free capitalism, and this is particularly obvious in the last chapter on hedge funds. It's only a shame he doesn't explicity set out his philosophical position and his reasons for holding it. Overall an entertaining, scholarly wor. Absolutely required reading for anyone involved with investing.
PS I liked the way the author sets out distinctions between investing and speculation in the opening pages!. ( )

Edward Chancellor carefully searches speculative history from the 17th Century onwards looking for commonality and differences in speculative situations and gives the history and his conclusions in this superb book.
He's not writing with an "agenda" and common themes emerge in a quite natural way from his narrative:

1) Speculation in modern times is closely connected with technological development eg. railways, electricity, automobiles, radio, computers, internet, etc. and this is undoubtedly positive as it directs capital at areas that offer fast increases in productivity.

2) Speculation tends to need a widely publicised "success story" to take off eg. 1767 the Duke of Bridgewater's highly profitable 30 mile canal from the coalmine on his estate at Worsley to the new textile factories at Runcorn, or, in more modern times the shockingly successful 1995 Netscape Communications internet flotation.

3) As a speculative area becomes widely subscribed excitement mounts, profitability declines and an urgent demand for credit (to speculate with) is met by the banks eg. 1720 the City exhausting its possibilities of lending against South Sea Company stock and the South Sea Company itself exhausting the possibilities of lending to its own buyers, or, more recently in 2007, (after this book was written), mortgage backed securities accommodating and extending the great New Millennium property speculation.

4) Late stage speculative booms combined with easy credit and lax government supervision attract a fine collection of opportunists and thieves floating overpriced (or worthless) shares onto a gullible public or issuing valueless bonds, eg. 1998 Yahoo! capitalization = 800 times earnings = $35 million per employee, or 1988 Michael Milken fabricating junk bonds (supposedly only junk in name) to finance the LBO wrecking of perfectly good companies for his and his friends vast profit. As the author says, "...junk bond purchasers taking most of the risk and "takeover entrepreneurs" snaffling most of the rewards."

I can highly recommend this book, especially for the way the author evaluates the interaction between investment and speculation. Is investment a by product of speculation or is speculation a by product of investment? ( )