Boombustology: Spotting Financial Bubbles Before They Burst [Hardcover]

Vikram Mansharamani (Author)

Book Description

Publication Date: March 8, 2011

A multi-disciplinary framework through which to spot financial bubbles before they burst.

Based on a popular undergraduate seminar, entitled Financial Booms & Busts, taught by the author at Yale University, Boombustology presents a multi-disciplinary framework for identifying unsustainable booms and forthcoming busts.

The magnitude of our recent financial crisis mandates a firm understanding of this phenomenon before the next crisis occurs. Boombustology provides an in-depth look at several major booms and busts and offers a solid framework for thinking about future occurrences.

• Examines why booms and busts are not random and can therefore be identified
• Focuses upon various theoretical and disciplinary lenses useful in the study of booms and busts
• Contains a framework for thinking about and identifying forthcoming financial bubbles including several tell-tale indicators of a forthcoming bust.
• Illustrates the framework in action by evaluating China as a potential bubble in the making. 

If you want to make better decisions in today’s turbulent investment environment, understanding the dynamics of booms and busts is the best place the start.  Boombustology can help you achieve this elusive goal.

Vikram Mansharamani is a Lecturer at Yale University and a global equity investor.

Editorial Reviews

Review

' ' New MPs should certainly have this book on their reading list'. (Financial World, April 2011). '...a valiant attempt to add new perspective'. (Economist.com, April 2011).

From the Inside Flap

THE WORLD IS in the midst of an accelerating sequence of booms and busts, and despite these developments, no organized multidisciplinary framework exists for thinking about them.

With the increased complexity and volatility surrounding financial bubbles, we need a more effective way to spot, and understand, these events. Based on his popular seminar at Yale University, Boombustology presents Vikram Mansharamani's multi-lens framework fore valuating the extremely elaborate social phenomenon of financial market booms and busts.

Unlike other finance books—which discuss making day-to-day investment decisions or the optimal strategy for a particular market—Boombustology will help you identify the "needle-moving" extremes that have the potential to render many traditional investment approaches useless.

• Divided into three comprehensive parts, this reliable resource: Develops five lenses—based upon the findings of various disciplines, from economics and psychology to politics and biology—that can be combined to evaluate financial extremes
• Examines the power of the multi-lens framework by applying it to five historical cases—Tulipomania, the Great Depression, the Japanese "Bubble Economy," the Asian Financial Crisis, and the U.S. Housing Boom and Bust—and demonstrates how the multidisciplinary approach might have helped to better understand these events as they took place
• Illustrates the framework in action by evaluating China as being in the midst of a potentially unsustainable boom

The framework found within these pages offers a robust understanding of the dynamics that precede, fuel, and ultimately reverse financial market extremes. Regardless of your economic or financial background, Boombustology will put you in a better position to spot financial bubbles before they burst.

See all Editorial Reviews

Product Details

• Hardcover: 272 pages
• Publisher: Wiley; 1 edition (March 8, 2011)
• Language: English
• ISBN-10: 0470879467
• ISBN-13: 978-0470879467
• Product Dimensions: 6.4 x 1 x 9.4 inches
• Shipping Weight: 1.3 pounds (View shipping rates and policies)
• Average Customer Review: 3.5 out of 5 stars  See all reviews (17 customer reviews)
• Amazon Best Sellers Rank: #591,936 in Books (See Top 100 in Books)

More About the Author

Vikram Mansharamani is an experienced global equity investor and Lecturer at Yale University. Dr. Mansharamani teaches the seminar "Financial Booms & Busts" to Yale College undergraduates, an extremely popular course as indicated by student reviews and enrollment. He is also the author of BOOMBUSTOLOGY: Spotting Financial Bubbles Before They Burst and is a regular commentator in the financial and business media, having contributed to Bloomberg, MarketWatch, CNBC, Forbes, Fortune, The New York Times, The Wall Street Journal, The Atlantic, Yale Global, The South China Morning Post, The Korea Times, The Khaleej Times, Harvard Business Review, and The Daily Beast, among others.

Dr. Mansharamani has been an active participant in the financial markets for the last 20 years. His experience includes positions in management consulting, investment banking, and asset management. Analysis has been the focus of his professional endeavors and his current research interests include bubbles in both financial and non-financial markets, the unsustainable dynamics of food and fuel, and the relative value of experts and generalists in understanding complex problems.

Dr. Mansharamani currently serves as chairman of the Torit Language Center Montessori school and is a member of the Board of Governors of the Association of Yale Alumni. He is also a Scholar-in-Residence at Tiger 21 and regularly advises the the organization's members on matters of asset allocation and investment strategy. He is a former director of the US-Pakistan Business Council, Interelate Inc, and ManagedOps Inc. He earned a PhD and MS from the Sloan School of Management at MIT, an MS in Political Science from MIT, and a BA from Yale University, where he was elected to Phi Beta Kappa and graduated with distinction.

Dr. Mansharamani is an aspiring triathlete, a Las Vegas regular, and a formerly competitive squash player. He currently lives in Brookline, Massachusetts with his wife and two children.

Most Helpful Customer Reviews

22 of 24 people found the following review helpful

5.0 out of 5 stars Essential Toolbox for Analyzing Today's Financial Markets! March 2, 2011

By Former Student

Format:Hardcover

As both a former student in Professor Mansharamani's seminar at Yale as well as a current analyst in the financial services industry, I can emphatically say that his new book, Boombustology, has given me one of the most useful, all-encompassing frameworks one can use to analyze today's complex and ever-evolving financial markets.

Boombustology is a written version of Mansharamani's class, Financial Booms and Busts. The seminar was, hands-down, the best and most thought-provoking class I took during my tenure at Yale. The seminar equipped its students with a toolbox with which we could delve deeper into the markets using a combination of economics, psychology, the sciences, and more. The class not only taught me respect for the financial markets, but it better prepared me to identify, using multidisciplinary lenses, recurring patterns in the boom and bust cycles that define markets today. The book makes these lesson accessible to all.

Boombustology draws from the wisdom of George Soros, Hyman Minsky, the Austrian school of economics, and other prominent historic influences. By standing upon the shoulders of these giants, Mansharamani crafts his masterful lens, which contains the unison of microeconomics, macroeconomics, human psychology, political science, and biological analysis to create a toolbox which is much more than the sum of its tools. He shows us the power of his toolbox through a series of case studies, in which he overlays his multidisciplinary analysis on the greatest boom and bust cycles of all time, including the Dutch Tulip Mania, the Great Depression, and the recent global credit crisis. Finally, the book arrives at a well-argued but shocking conclusion by applying Boombustology to depict potentially the greatest bubble of all time: China.

I strongly believe that Mansharamani's multidisciplinary toolbox should be used in practice to identify booms that are happening in the markets today and predict potential busts in the future. Indeed, the financial markets have evolved into a never-ending cascade of boom and bust cycles, and I fully intend to use the art of Boombustology to frame my investment decisions throughout the remainder of my career.

Although this book successfully transcends being a "narrative" and is, in essence, a toolbox of various lenses, it only scratches the surface of what is possible through the careful application of multidisciplinary analyses of financial markets. I would have liked to read more case studies to demonstrate the robustness of the Boombustology approach, and I would have also liked to see the methodology applied to booms and busts in more asset classes (bonds, stocks, oil, gold, etc). Perhaps Professor Mansharamani can expound on these ideas in another book?

All in all, Boombustology is worth more than its weight in gold (even if those prices are potentially bubbly) and has armed me with a useful framework to look at global financial markets. I highly recommend incorporating the lessons of this book to broaden one's perspective and build a strong foundation for both studying and participating in the markets.

16 of 17 people found the following review helpful

3.0 out of 5 stars More a review of a few bubbles than any useful metrics May 13, 2011

By Scatterbrain

Format:Hardcover|Amazon Verified Purchase

Anyone who has studied bubbles has probably already read all of this stuff. The author relies heavily on the work of George Soros, Robert Shiller, Hyman Minsky, Charles Kindleberger, Edward Chancellor, Christopher Wood, Donald Rapp and a number of others. Very little original thought is present in the book but lifts ideas and even whole passages from other books, usually with the callout "eloquently summarized by x".

Part I of the book describes the five "lenses" and is, frankly, a very basic review of economics with some basic psychology (herd behavior) and biology thrown in.

Part II provides a brief history of 5 different bubbles and applies the filters to them. Much of this section is lifted directly from other books. Some of the analysis is interesting, but quickly becomes repetitive and often it feels like the author is filling in a section merely because it is in the outline.

Part III is divided into two parts. The first part is essentially an outline for the review of the previously discussed bubbles. I was scratching my head wondering why on earth the same material would be covered again. It has the suspicious smell of padding as often inserted by college students. If you have made it this far, you have read through countless repetitions hoping for some original thought. And the payoff is a chapter dedicated to the theory that China is currently in a bubble. The author makes his case and applies his five lenses to the evidence to reach the conclusion that, yes, China currently is in an unsustainable boom. I agree that China is in a bubble but the author offers no solace. He admits he cannot predict when it will happen or what the magnitude will be (and offers no clues as to timing). We are left with advice to keep our eyes on the art market and world's tallest buildings. A Starry Night sells for $200M...time to short China! Not quite.

All in all a decent primer for the complete bubble novice (Charles Kindleberger's Manias, Panics, and Crashes is a better start though). Experienced bubbleheads can safely pass.

16 of 18 people found the following review helpful

4.0 out of 5 stars Nice, Simple Overview March 3, 2011

By Awolfe

Format:Kindle Edition

Most of the frames proposed in this book won't be new to anybody who has taken econ classes beyond 101, but the book does a good job of pulling them together into a simple model. Likewise, the China chapter is a re-hash of bear fund reports and arguments, but having them all pulled together in simple language is quite useful. Read the whole thing in a day, but expect to be thinking about it for quite some time.