This data set consists of monthly stock price, dividends, and earnings data and the consumer price index to allow conversion to real values , all starting January The price, dividend, and earnings series are from the same sources as described in Chapter 26 of my earlier book Market Volatility [Cambridge, MA: MIT Press, ] , although now I use monthly data, rather than annual data. Dividend and earnings data before are from Cowles and associates Common Stock Indexes , 2nd ed. Stock price data are monthly averages of daily closing prices through January , the last month available as this book goes to press. Bureau of Labor Statistics begins in ; for years before 1 spliced to the CPI Warren and Pearson's price index, by multiplying it by the ratio of the indexes in January
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T his book is a broad study, drawing on a wide range of published research and historical evidence, of the enormous recent stock market boom. Although it takes as its specific starting point the current situation, it places that situation in the context of stock market booms generally, and it also makes concrete suggestions regarding policy changes that should be initiated in response to this and other booms.
The need for such a book is particularly urgent today, in view of the widespread and quite fundamental disagreement about the stock market. When people disagree at such a basic level, it is usually because they possess only pieces of the overall picture. Yet meaningful consensus can only be achieved by laying out all the available facts. I have therefore tried in this book to present a much broader range of information than is usually considered in writings on the market, and I have tried to synthesize this information into a detailed picture of the market today.
Why did the U. What changed to cause the market to become so highly priced? What do these changes mean for the market. An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while. Irrational Exuberance By Robert J. No cover image. Read preview. Synopsis In this bold and potentially urgent volume, Robert J.
Shiller, a respected expert on market volatility, offers an unconventional interpretation of recent U. He warns that poorer performance may be in the offing and tells us how we--as a country and individually--can respond. Shiller credits an unprecedented confluence of events with driving stocks to uncharted heights.
He analyzes the structural and psychological factors that explain why the Dow Jones Industrial Average tripled between and , a level of growth not reflected in any other sector of the economy. In contrast to many analysts, Shiller stresses circumstances that alter investors' perceptions of the market. These include the entry of the Internet into American homes, the misimpression that the aging of the baby-boom generation builds long-term protection into the market, and herd behavior, such as day-trading.
He also examines cultural factors, including sports-style media coverage of the Dow's ups and downs and "new era" thinking about the economy. He considers--and challenges--efforts to rationalize exuberance that are based on either efficient-markets theory, narrowly construed, or the claim that investors have only recently learned the true value of the market.
In the most controversial portion of the book, Shiller cautions that a market that is overvalued by historical standards is inherently precarious.
Among his prescriptions is an urgent plea to immediately end what he argues are perilous schemes to privatize social security in favor of plans to reform it. He also argues that private pension plans that encourage many people to put their entire retirement funds in the stock market should be modified. And he calls on our savings and investment institutions to take more sensible account of emerging risk-management principles.
Shiller's analysis is convincingly documented, and--regardless of the market's future behavior--his book will stand as an important elaboration of why stocks soared and what our investment alternatives are.
Irrational Exuberance is a must-read for pension-plan sponsors and endowment managers in the United States and abroad.
It will also be studied by investment advisers, policy makers, and anyone from Wall Street to Main Street who doesn't want to be caught sitting on the speculative bubble if or when it bursts. Excerpt T his book is a broad study, drawing on a wide range of published research and historical evidence, of the enormous recent stock market boom.
T his book is a broad study, drawing on a wide range of published research and historical evidence, of the enormous recent stock market boom. Although it takes as its specific starting point the current situation, it places that situation in the context of stock market booms generally, and it also makes concrete suggestions regarding policy changes that should be initiated in response to this and other booms. The need for such a book is particularly urgent today, in view of the widespread and quite fundamental disagreement about the stock market. When people disagree at such a basic level, it is usually because they possess only pieces of the overall picture.
Irrational Exuberance – Robert J. Shiller (2000)
Robert J. Many of our ebooks are available through library electronic resources including these platforms:. In this revised, updated, and expanded edition of his New York Times bestseller, Nobel Prize—winning economist Robert Shiller, who warned of both the tech and housing bubbles, cautions that signs of irrational exuberance among investors have only increased since the —9 financial crisis. In other words, Irrational Exuberance is as relevant as ever. Previous editions covered the stock and housing markets—and famously predicted their crashes. This edition expands its coverage to include the bond market, so that the book now addresses all of the major investment markets. In addition to diagnosing the causes of asset bubbles, Irrational Exuberance recommends urgent policy changes to lessen their likelihood and severity—and suggests ways that individuals can decrease their risk before the next bubble bursts.