The Myth of the Rational Market

A History of Risk, Reward, and Delusion on Wall Street

By: Justin Fox

Narrated by: Alan Sklar

“Do we really need yet another book about the financial crisis? Yes, we do—because this one is different….A must-read for anyone who wants to understand the mess we’re in.”
—Paul Krugman, New York Times Book Review

“Fox makes business history thrilling.”
—St. Louis Post-Dispatch

A lively history of ideas, The Myth of the Rational Market by former Time Magazine economics columnist Justin Fox, describes with insight and wit the rise and fall of the world’s most influential investing idea: the efficient markets theory. Both a New York Times bestseller and Notable Book of the Year—longlisted for the Financial Times Business Book of the Year Award and named one of Library Journal Best Business Books of the Year—The Myth of the Rational Market carries readers from the earliest days of Wall Street to the current financial crisis, debunking the long-held myth that the stock market is always right in the process while intelligently exploring the replacement theory of behavioral economics.

Takes patience, but pays off

This is not from the Michael Lewis "fascinating personal quirks carry the story" school. But having exhausted most of the 2008 popular books, this is at a different, scholarly level. I might have edited it a bit shorter, but I enjoyed it.

Enthralling storytelling style unfolding history of market analysis

It all makes sense now! During my MBA at the University of Chicago (where many of these market economists earned their Nobel prizes) I fought w Fama about the Random Walk theory. Now I understand why he could not have thought anything else, given his background.
The author skillfully reveals the evolution of opinion about the market forces. The reader will see the logic of each step and, If he thinks it through, will take away a greater death of understanding from each step.

An Awesome Histoy of Financial Economics

I am a financial economist, and I wholeheartedly endorse this book. It gives a very fair, balanced, complete and scientific account of financial economics, and yet is written in a fun, readable tone that never loses the reader's interest. This book is a must for any non-economist who wants to understand what they read in the news. You will learn a lot, and have fun learning it.

Excellent unbiased overview of irrational markets

Loved the unbiased chronology of the irrationality of well known academics as well as amateur investors and professional investors alike.

Probably most interesting to economists

I liked this book, but I am, in fact, an economist. To a (young) economist, there's a lot to be interested in here. Ideas you've been exposed to and never really understood the context for are explained pretty well. But for non-economists, I strongly suspect this would come off as pretty dry.

The better book on the history of economic thought, I would say, is The Grand Pursuit. To some degree, this book picks up where that one leaves off (in the mid-twentieth century, though TGP does talk somewhat as Amartya Sen). Anyway, if you're interested in the history of economic thought and haven't read that one, I'd start there and then consider this. If you're more interested in how the financial markets work today, there are a few books on this subject (Dark Pools, More Money than God--but I'm actually just starting these, so I can't tell you yet whether they're worth it). If you're more just looking for a good read on recent financial market stuff, one of the Michael Lewis books is probably best, The Big Short or Boomerang.