Extraordinary Popular Delusions And The Madness Of Crowds

The title(above) of the book written by Charles Mackay in 1841 was one of the first investment books I read upon entering the business in the 1980s. It made a lasting impression on me, re-enforcing the skeptical view of human activities I had already developed through reading history, to providing valuable context for making investment decisions.

As the title infers, it examples a series of investment bubbles, such as the Tulip Bulb Mania. The author also examines the psychology of crowds, which tend to reflect the basest instincts of its members. A caveat to readers, I remember there being a couple of appallingly sexist comments which reflects the time the book was written.

The book remains a valuable addition to an investor’s library for its comment on the human condition and reminder that human psychology has not changed over the millennia.

The title neatly summarizes our current view of global markets and corners of the political world. Investor sentiment and market valuation, using both general and our own proprietary measures, are sitting at unprecedented levels.

The result, in our opinion, is a very high-risk market environment. We discuss our risk calculations at length in the recently published February issue. We also update our views on global markets, our current investment positions, and our methods to optimize risk/reward.

If you found this post of interest, you’ll find the Global Investment Letter of value. To view free sample issues and to receive our weekly investment comment please visit: https://www.globalinvestmentletter.com/sample-issue/