Devil Take the Hindmost: A History of Financial Speculation [Paperback]

Edward Chancellor (Author)

Book Description

Publication Date: June 5, 2000

Is your investment in that new Internet stock a sign of stock market savvy or an act of peculiarly American speculative folly? How has the psychology of investing changed--and not changed--over the last five hundred years? Edward Chancellor examines the nature of speculation--from medieval Europe to the Tulip mania of the 1630s to today's Internet stock craze. A contributing writer to The Financial Times and The Economist, Chancellor looks at both the psychological and economic forces that drive people to "bet" their money in markets; how markets are made, unmade, and manipulated; and who wins when speculation runs rampant. Drawing colorfully on the words of such speculators as Sir Isaac Newton, Daniel Defoe, Ivan Boesky, and Hillary Rodham Clinton, Devil Take the Hindmost is part history, part social science, and purely illuminating: an erudite and hugely entertaining book that is more timely today than ever before.

"Entertaining, useful, admirable scholarship . . . Chancellor seems to have read everything." --Adam Smith, The New York Times Book Review

"Anyone contemplating a stock market venture and certainly anyone now involved should read this book."--John Kenneth Gailbraith

Editorial Reviews

Amazon.com Review

"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. In Devil 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 relevant to today's U.S. investors by using his analysis of past speculative manias as a lens through which to view the current bull-market binge. No matter what his or her current investment outlook is--bull or bear--anyone with capital to invest would do well to spend a thoughtful weekend with this book. Highly recommended. --Harry C. Edwards --This text refers to the Hardcover edition.

From Library Journal

In an era of rampant speculation and questionable investor habits, it is a pleasure to read an insightful, well-focused analysis of the events that have dominated social and economic history since at least the second century B.C.E. Starting with the speculative frenzy that gripped ancient Rome, British business journalist Chancellor goes on to provide keen insight into a wide variety of events, including the emergence of stock exchanges from the great fairs of northern Europe, the tulip mania that gripped the Dutch Republic in the 1630s, the insanity of the Mississippi and South Sea bubbles, the robber barons and their impact during the Gilded Age, the events leading to the Crash of 1929, the Japanese bubble economy of the 1980s, the Mexican crisis of 1994, the Asian market crisis of 1997, and the speculative manias that have accompanied the emergence of new technologies, including railroads, the telegraph, automobiles, radio, and the Internet. A well-rounded presentation that should be included in all public and academic libraries.ANorman B. Hutcherson, Beale Memorial Lib., Bakersfield, CA
Copyright 1999 Reed Business Information, Inc. --This text refers to the Hardcover edition.

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Product Details

• Paperback: 400 pages
• Publisher: Plume (June 5, 2000)
• Language: English
• ISBN-10: 0452281806
• ISBN-13: 978-0452281806
• Product Dimensions: 9 x 6 x 0.9 inches
• Shipping Weight: 14.4 ounces (View shipping rates and policies)
• Average Customer Review: 4.5 out of 5 stars  See all reviews (80 customer reviews)
• Amazon Best Sellers Rank: #69,570 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

62 of 63 people found the following review helpful:

5.0 out of 5 stars This Time is Never Different, June 29, 2001

By 

Craig L. Howe "The Pointed Pundit" (Darien, CT United States) - See all my reviews
(VINE VOICE)    (REAL NAME)   

This review is from: Devil Take The Hindmost: A History Of Financial Speculation (Hardcover)

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 to modern economic theory, markets are efficient and speculators are rational opportunists intent on maximizing their wealth.

Chancellor, a former investment banker and historian, disagrees. More than fear and greed drives speculators, they motivated by deeper compulsions and aspirations. Speculation, he says, can only be understood within a social context and that its history cannot be a simple description of economic affairs. It is important to understand the behavior and attitudes of politicians, since the laws governing markets are written and enforced by governments.

He traces the origins of speculative fever back to ancient Rome and follows the thread through Holland's tulip mania in the 1630s and London's stockjobbers 70 years later.

The book ends with an insightful analysis of the Junk Bond era here in the United States, the Japanese bubble and the near collapse of Long Term Capital Management. It is a must read for every serious investor.

40 of 41 people found the following review helpful:

5.0 out of 5 stars Superb Introduction to Speculative Bubbles, February 23, 2001

By 

Mark Wylie (Spokane, WA United States) - See all my reviews
(REAL NAME)   

This review is from: Devil Take the Hindmost: A History of Financial Speculation (Paperback)

The heading for one chapter of Edward Chancellor's fine book quotes the investor Sir John Templeton: "The four most expensive words in the English language are 'this time it's different.'" Templeton's words sum up the most important lesson to be learned from this outstanding history of speculation, which focuses in particular on those manic episodes called bubbles, in which the prices of assets are driven to levels far above those justified by the assets' underlying fundamentals.

Chancellor's account, while not a comprehensive study of speculation, thoroughly examines major speculative periods from the tulip mania of the early 17th century, to the Japanese "bubble economy" of the 1980's. Three repeating motifs characterize these speculative episodes. First is the irrationality of financial markets, especially the way in which people of all eras are susceptible to the euphoria which inflates a bubble. Second is the constant recurrence of manipulation of markets by the greedy and unethical, the likes of Jay Gould and his accociates.

The third and most important theme is the existence of parallels between past speculative bubbles and conditions in our own time. Chancellor convincingly argues, for example, that the internet mania of today is similar in many ways to the British railway bubble of the 1840's.

I strongly recommend this book to anyone with an interest in financial markets or their influence on history. The only, slight caveat I would offer is that it helps a reader to have at least some knowledge of the language of financial markets, as Chancellor at times tosses terminology at readers without offering a clear definition.

33 of 35 people found the following review helpful:

4.0 out of 5 stars Read it, November 21, 1999

By A Customer

This review is from: Devil Take The Hindmost: A History Of Financial Speculation (Hardcover)

How can one justify the current market valuations of money-losing Internet ventures, and even of some 'blue-chips' trading at 50+ times earnings? One would be surprised to find some of the most eye-opening answers to this question in the investing behavior of ancient Romans, 17th century Dutch, Victorian Englishmen and Gilded Age Americans. That's why this book is excellent reading for those who believe human nature is remarkably uniform when it comes to greed and financial speculation. On the negative side, the author sounds too 'opinionated' sometimes, as when he implies that the recent rebirth of classic economic thought and monetarism serve merely as intellectual "window-dressing" for a wave of perverse speculation. Were it not for this minor fault, I would certainly rate it a 5-star book. Read it and enjoy.