Markets, Mobs, and Mayhem: A Modern Look at the Madness of Crowds [Hardcover]

Robert Menschel (Author)

Book Description

Publication Date: August 30, 2002

In this fascinating tour through cultural, global, economic, and business history, icon of the financial world Robert Menschel explores the phenomenon of crowd psychology and its effects on business and culture. Explaining how crowd psychology creates market bubbles and irrational exuberance, Menschel mines world history—from the rise of the Nazis in Germany, to the fanatical love of brands, to the Dutch tulip craze of the seventeenth century, to America’s 1990s Internet bubble—to reveal how the behavior of crowds negatively affects the business world. Championing the causes of individuality and common sense, Markets, Mobs & Mayhem offers real wisdom for investors who want to keep their wits when everyone else is losing theirs.

Editorial Reviews

From Publishers Weekly

Fear epidemics have plagued people for centuries, and in the past year Americans have weathered anthrax scares, fears of the end of good economic times and fears of terrorism. In his new book, Markets, Mobs & Mayhem: A Modern Look at the Madness of Crowds, Robert Menschel, senior director of the Goldman Sachs Group, shows that, logically, it's "easy to counter" these fear epidemics, yet these epidemics and crowd behavior are often extremely powerful forces that can cause rational people to think and act irrationally. The author sets out to show readers "how to escape the crowd" and "what happens when you can't." He adroitly and sometimes comically charts Holland's mid-1600s' "tulipmania," Chicken Licken's fright about a falling sky, a 1938 panic outbreak spurred on by a radio dramatization of H.G. Wells's War of the Worlds, the Ku Klux Klan's violent acts and more, offering concrete suggestions for keeping one's head when the masses seem to be losing theirs. His book, which includes a foreword by William Safire, is a timely, intelligent and amusing study of peer pressure's extreme capabilities.
Copyright 2002 Reed Business Information, Inc.

Review

"...a collection of vignetttes, stories, proverbs and quotations laced with sound advice for avoiding the stampedes that can be triggered in a volatile marketplace..." (Financial Times, 4 July 2002)

See all Editorial Reviews

Product Details

• Hardcover: 224 pages
• Publisher: Wiley; 1 edition (August 30, 2002)
• Language: English
• ISBN-10: 0471233277
• ISBN-13: 978-0471233275
• Product Dimensions: 9.2 x 6.1 x 1 inches
• Shipping Weight: 1 pounds (View shipping rates and policies)
• Average Customer Review: 3.5 out of 5 stars  See all reviews (8 customer reviews)
• Amazon Best Sellers Rank: #1,295,638 in Books (See Top 100 in Books)

More About the Author

Discover books, learn about writers, read author blogs, and more.

Customer Reviews

Most Helpful Customer Reviews

12 of 13 people found the following review helpful:

5.0 out of 5 stars Not for the masses, but that's the point., December 12, 2002

By 

Robert J. Walker (Washington , D.C.) - See all my reviews
(REAL NAME)   

This review is from: Markets, Mobs, and Mayhem: A Modern Look at the Madness of Crowds (Hardcover)

This is not a book for the masses. It won't make you rush out and buy anything. It probably won't even change your life in any substantial way. But it will make you think. And it might just prevent you from being victimized by the latest fad or swept away by the next hysteria. Most readers, I suspect, have heard of the tulipmania or the South Sea company madness, but this book gives a brief survey of the lesser known, or lesser recognized, panics or manias, including those that have nothing to do with financial markets. I found it stimulating reading, laced with a little humor.

The book's message, if internalized, operates like a Segway scooter applied to the business world. It should keep you on an even keel. And in the often topsy-turvy world of Wall Street finance (or just life in the 21st Century), it really helps to have an internal gyroscope or automatic stabilizer that keeps you from falling over every time you hit a bump in the road.

It's not a book for the masses. But that's probably just the point. Next time you want to rush out and join the herd, it might help to read, or reread, this book.

19 of 24 people found the following review helpful:

1.0 out of 5 stars Very disappointing, February 8, 2003

By 

Ralph Block (Westlake Village, California USA) - See all my reviews
(REAL NAME)   

This review is from: Markets, Mobs, and Mayhem: A Modern Look at the Madness of Crowds (Hardcover)

After reading "Devil Take the Hindmost," which deals very intelligently and thoroughly with investment bubbles of all kinds going back to the South Sea Bubble, I was very much looking forward to reading this book, particularly as it has been written by a very successful stock market investor. I was, however, sadly disappointed.

The author expends virtually all of his efforts discussing mob behavior, but rarely in the context of investments and market madness, i.e., most of the examples he uses relate to Ku Klux Klan activities, the French citizens' attack on the Bastille, the Watts riots and other such emotional mob activities. While these are often interesting and sometimes horrifying, they have only tangential bearing on market manias and investment fads. Furthermore, most of the text has been copied and pasted from reports on these activities that were written by others.

As an investment professional (and having invested in the market myself for over 35 years), I have long believed that, at least in the short term, market prices are dictated as much by psychology as by fundamentals such as profit growth, investment return expectations, balance sheets, business strategies, profit margins, competiting products and services, interest rates and such. And I thought the book would provide at least a few insights into investor psychology and how it moves markets; certainly a thorough discussion of the Dotcom and tech manias of recent years would have been a very apt topic for discussion.

Alas! There was no discussion at all about these issues of investment psychology; rather, the author was content to provide example after example of how, many times in the past, mobs are capable of taking on a life of their own and engaging in group-think, abandoning analysis and rational decision-making. Well, I guess we already know that. We are left on our own to try to figure out how "collective mob behavior" infects investors' psyches and affects the movement of stock prices.

Readers who would like a lot more insight into that process should buy "Devil Take the Hindmost," and not waste their time or money on this book.

Ralph

3 of 3 people found the following review helpful:

5.0 out of 5 stars A must-read book with wide appeal!, October 8, 2002

By A Customer

This review is from: Markets, Mobs, and Mayhem: A Modern Look at the Madness of Crowds (Hardcover)

This book is filled with fascinating true stories of instances where the madness of a crowd made people lose independent rational thought. It's interesting from so many perspectives -- historical, social, psychological, cultural, political in addition to sharing endless amounts of wisdom about the stock market. What wonderful lessons on group psychology!