On this day in 1996, thenfederal reserve chairman alan greenspan made his famous speech wherein he asked if irrational exuberance had begun to play a role in the increase of certain asset prices. Shiller princeton university press princeton, new jersey. Its also a book by robert shiller describing the 2000 stock market bubble. Filled with charts and graphs and footnotes of every description, the bookwhose title comes from a quote by alan greenspanattacks wall street ideas that have become so accepted that they are household sayings. It predicted the collapse of the tech stock bubble through an analysis of the structural, cultural, and psychological factors behind levels of price growth. This book gave a chilling warning of the impending dotcom bubbles burst. Irrational exuberance is a dazzling, richly textured, provocative book. The term irrational exuberance derives from some words that alan greenspan, chairman of the. Irrational exuberance wikimili, the free encyclopedia. The book examines economic bubbles in the 1990s and early 2000s, and is named after federal reserve chairman alan greenspans famed irrational exuberance quote warning of such a possible bubble. Irrational exuberance is a march 2000 book written by american economist robert j. Shiller offers an unconventional interpretation of recent u. The book analyzes the broader stock market boom that lasted from 1982 through the dotcom years. Shiller, a respected expert on market volatility, offers an unconventional interpretation of recent u.
Taking its title from alan greenspans famous description of the stock market in 1996, irrational exuberance was first published in 2000 and coincided with the nasdaq peak that same year. Alan greenspan former federal reserve board chairman in his comments on december 5th, 1996. Federal reserve board, warned the country about the mood of irrational exuberance that was pushing up stock prices. The book originally contributed to my courage to be conservative on the market and hence was one of the most valuable books i have ever read.
Offers an unconventional interpretation of us stock market highs and shows that alan greenspans term irrational exuberance is a good description of the mood behind the market. Shiller used it as the title of his book, irrational exuberance, first published in 2000, where shiller states. In hindsight, its clear that the bull was just beginning. The original and bestselling 2000 edition of irrational exuberance evoked alan greenspans infamous 1996 use of that phrase to explain the alternately soaring and declining stock market.
When fed chairman alan greenspan used the phrase irrational exuberance to describe the 1996 booming stock market, he enigmatically hinted at a phenomenon at odds with the prevailing efficient market theory. The definition of irrational exuberance has its origin in a speech alan greenspan gave on december 5, 1996. When alan greenspan, then chair of the federal reserve board, used the term irrational exuberance to describe the behavior of stock market investors, the world fixated on those words. Get the key points from this book in less than 10 minutes. The book walks readers through structural reasons for market bubbles, then ventures. Irrational exuberance irrational exuberance is written by nobel laureate robert j. The term irrational exuberance derives from some words that alan greenspan, chairman of the federal reserve board in washington, used in a blacktie dinner speech entitled the challenge of central banking in a democratic society before the american enterprise institute at the washington hilton hotel december 5, 1996.
The term irrational exuberance derives from some words that alan greenspan, chairman of the federal reserve board in washington, used in a blacktie dinner speech entitled the challenge of central banking in a democratic society before the american enterprise institute at the washington hilton hotel december 5. On december 5, 1996 chairman alan greenspan used the phrase irrational exuberance when speaking of his deep concern about the high level of stock prices not as a forecast but as a long term threat to. The book gets its name and theme from the buzzwords used in alan greenspans speech as the chairman of the us federal reserve board in 1996. Shortly after a 1996 briefing by author robert shiller, alan greenspan, chairman of the u. Alan greenspan is a famous american economist who served as chairman of the federal reserve of the united states from 1987 to 2006. The books second edition warns of the impending housing. Remarks by chairman alan greenspan federal reserve. A few days before alan greenspan famously used the phrase irrational exuberance in a december 1996 speech, shiller had been at lunch with the fed chairman, arguing that the stock market was. Buy irrational exuberance book online at low prices in. The original and bestselling 2000 edition of irrational exuberance evoked alan greenspans infamous 1996 use. I chose this phrase as the title for my book because many people know instantly from this. Anyone who thinks this will be easy should read irrational exuberance, a new book by yale university economist robert j.
Shiller who is currently a professor of economics at yale university. The book examines economic bubbles in the 1990s and early 2000s, and is named after federal reserve chairman alan greenspans famed irrational exuberance quote warning of such a possible bubble in 1996. Irrational exuberance revised and expanded third edition. Greenspans irrational exuberance speech in 1996 came near the begin. In this timely and prescient update of his celebrated 2000 bestseller, robert shiller returns to the topic that gained him international fame. Shiller, after explaining the human instinct to rationalize this irrational behavior, then offers some solutions to prevent future speculative bubbles. Irrational exuberance is a march 2000 book 1 written by american economist robert j. In this controversial, hardhitting account of todays explosive market, robert j. Shiller takes a little know phrase uttered by alan greenspan, irrational exuberance and. Irrational exuberance is the point where people invest in things where they cannot reasonably justify the price that they are paying. The longest bull market in history we are experiencing right now may be unprecedented, but to robert shiller, the moment of irrational exuberance is coming back. The phrase was coined by onceuponatime federal reserve board chairman, alan greenspan, when discussing the dotcom bubble in december 1996. Irrational exuberance is the phrase used by the then federal reserve board chairman, alan greenspan, in a speech given at the american enterprise institute during the dotcom bubble of the 1990s.
Shiller, a yale university professor and 20 nobel prize winner. Shiller, a yale professor, originated the phrase irrational exuberance before alan greenspan made it famous, and in his research he has documented the rise and fall of home prices going back. Beyond arguing that the present market is a speculative bubble, shiller contends that investor psychology is so given to herd behavior that its almost impossible to manipulate or even influence. Having predicted the stock market collapse that began just one month after the first edition was published, he now expands the book to cover other markets that have become volatile, particularly the recently redhot housing. Irrational exuberance is the phrase used by the thenfederal reserve board chairman, alan greenspan. Anyone who heeded that warning would have missed nearly unprecedented gains. On december 5, 1996, in what became a famous speech at the american enterprise institute. Alan greenspan has 24 books on goodreads with 27974 ratings.
On this day in 1996, thenfederal reserve chairman alan greenspan made his famous speech wherein he asked if irrational exuberance had begun. It predicted the collapse of the tech stock bubble through an analysis of the structural, cultural, and psychological factors behind levels of price growth not reflected in any other sector of the economy. Alan greenspans most popular book is the age of turbulence. Marketroiling phrase from federal reserve chairman alan greenspan, in a 1996 speech. Editing greenspans memoirs former chairman of the federal reserve alan greenspan has signed a deal with penguin press to publish his memoirs. Irrational exuberance is also the name of a 2000 book authored by economist robert shiller. He warns that poorer performance may be in the offing and. This book was first published by princeton university press in year 2000 which was coincided with the dot com boom period. Alan greenspans speech, the market did actually react according to what is called irrational exuberance. In the stock market, its when investors are so confident that the price of an asset will keep going up, they lose sight of its underlying value. The book examines economic bubbles in the 1990s and early 2000s, and is named after federal reserve chairman alan greenspans famed irrational exuberance. The phrase was coined by former federal reserve chairman alan greenspan in 1996.
The concept of irrational exuberance came to me in the bathtub one morning, alan greenspan recalled. The phrase was interpreted as a warning that the stock market might be overvalued. Short clip from the december 5, 1996 speech at the american enterprise institute in which thenfederal reserve chairman alan greenspan coined the phrase irrational exuberance, which would come to. This book analyzes the structural and psychological factors that explain why the dow jones industrial average tripled between 1994 and 1999.
Shiller, a leading expert on market volatility, evokes alan greenspans infamous 1996 reference, irrational exuberance, to explain the alternately soaring and declining stock market. Irrational exuberance evoked alan greenspans well known 1996 comment on the absurdity of stock market valuations. Taking his books title and thesis from alan greenspans 1996 description of investors, shiller economics, yale univ. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have. The word irrational and exuberance themselves are not new, but they are first combined and used by mr. This book is a broad study, drawing on a wide range of published research and historical evidence, of the enormous recent stock market boom. The title of this book was named after alan greenspan. Remarks by chairman alan greenspan at the annual dinner and francis boyer lecture of the american enterprise institute for public policy research, washington, d. But the phrase was made famous or infamous, depending on how you look at it by yale professor robert shiller, who published the book.
Books by alan greenspan author of the age of turbulence. Shillers irrational exuberance is about the most bearish book you could ever read about the stock market. In this bold and potentially urgent volume, robert j. It presents 12 factors that created the boom and suggests policy changes for better managing irrational exuberance. Federal reserve board, warned the country about the mood of irrational exuberance that. I write a monthly column finance in the 21st century for project syndicate, with coverage around the world, and this column contains further development of some themes in the book. It focuses on how the mood of irrational exuberance is pushing up the stock prices and stretching the valuations and how the levels of the us stock markets are way above rational. Alan greenspan irrational exuberance business insider.
1468 1111 313 907 750 1049 136 159 1062 1026 200 1188 636 582 261 1412 1088 1054 312 1561 183 317 1025 200 1082 398 3 290 96 1466 375 423 223 1419