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Lunch » Tags » Books » Reviews » Devil Take The Hindmost: A History Of Financial Speculation » User review

Macro Perspective...Micro Analysis

  • Jan 15, 2000
It is helpful to our understanding of financial speculation early in the 21st century to view it within an historical framework. Chancellor provides such a framework and more...much more. In the the initial chapter ("The Bubble World"), he explains the origins of financial speculation and then shifts his attention to a series of famous (sometimes infamous) situations throughout three centuries. As Chancellor explains, "I concentrate on occurrences of speculation in the leading economic powers of the day, from the Dutch Republic in the seventeenth century to Japan in the 1980s, interspersed with the occasional look at speculation in the present day. I believe that speculation can only be understood within a social context and that a history of speculation cannot simply be a description of economic affairs but must also be something of a social history." Joel Mokyr has a similar objective in The Lever of Riches in which he examines various interrelationships between technological creativity and economic progress since classical antiquity. Both he and Chancellor present information and develop their ideas within what could be called an "historical infrastructure." They succeed admirably.

In Chapter 7, as Chancellor concludes his examination of "The Gilded Age", he quotes the American economist H.C. Emory who wrote that "whereas gambling consists in placing money on artificially created risks of some fortuitous event, speculation consists in assuming the inevitable risks of changes in value." For Chancellor, speculation in the late-nineteenth century "brought more harm than good and transferred property from the hands of the many into the pockets of the few." This is also a useful perspective on the subsequent "Crash" of 1929 and thereafter, a volatile period which Chancellor also analyzes with eloquence as well as insight.

It is an even more useful perspective on the economy of a country such as Russia in the early-21st century. As Chancellor correctly points out in the Epilogue, "The issue of speculation in emerging markets and the unfettered trade in foreign currencies is the most immediate and vexing problem faced by policymakers." For me, Devil Take the Hindmost is an absolutely indispensable guide to more than three centuries of stock market speculation. He focuses on a broad range of speculators (eg Del Defoe, Benjamin Disraeli, Jay Gould, Ivan Boesky, Michael Milken, and Hilary Rodham Clinton); in process, he suggests that the primary motives which drive these and other speculators are far more complicated than many of us (I at least) had assumed...and, as often as not, these morives reflect "the national character" of the country in which a speculator succeeds or fails.

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review by . October 05, 2010
A wizened wag at an investment firm once warned me to start looking for the sell tickets as soon as I heard the words "This Time is Different." In my short experience as an investor, it was some of the most sage advice I have received. Edward Chancellor book arrives at the same conclusion but provides more foundation to recognize the bubbles of speculation. Investment bubbles never change. Yet, for the investor or trader caught up in one, they remain difficult to identify. According …
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"The longest bull market in history" is a term that gets used a lot these days. Since 1990, the Dow Jones Industrial Average has risen some 8,000 points, from around 2,700 in January 1990 to nearly 11,000 today--a boom by anyone's standards, including Edward Chancellor's. InDevil Take the Hindmost, Chancellor takes an entertaining, albeit sobering, look at the history of speculative manias and the mass delusion that surrounds them.

Beginning with the "tulipomania" that gripped Holland in the 1630s, Chancellor chronicles the formations and irrational euphoria that can inflate markets, from shares of South Sea stock in England in the 1720s to real estate in Japan in the late 1980s. He characterizes the speculative spirit as one that

loves freedom, detests cant, and abhors restrictions. From the tulip Colleges of the seventeenth century to the Internet investment clubs of the late twentieth century, speculation has established itself as the most demotic of economic activities. Although profoundly secular, speculation is not simply about greed. The essence of speculation remains a Utopian yearning for freedom and equality which counterbalances the drab rationalistic materialism of the modern economic system with its inevitable inequalities of wealth.
But it's precisely such inevitability that always seems to win out, when "sharply rising prices followed by sudden panic without cause" bring speculative excess to an abrupt end.

Chancellor makes Devil Take the Hindmost especially ...

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ISBN-10: 0374138583
ISBN-13: 978-0374138585
Author: Edward Chancellor
Publisher: Farrar, Straus and Giroux

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