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The Trouble With Prosperity: A Contrarian's Tale of Boom, Bust, and Speculation
 
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The Trouble With Prosperity: A Contrarian's Tale of Boom, Bust, and Speculation (Paperback)

~ James Grant (Author)
4.1 out of 5 stars  See all reviews (7 customer reviews)


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Product Description

In this updated paperback edition, Jim Grant spins a series of revealing, interlocking stories from little-known Wall Street lore. The historic episodes of boom and bust wittily recounted by Grant offer cautionary lessons for every investor National publicity .

Product Details

  • Paperback: 368 pages
  • Publisher: Crown Business (February 24, 1998)
  • Language: English
  • ISBN-10: 0812929918
  • ISBN-13: 978-0812929911
  • Product Dimensions: 8.5 x 5.8 x 0.8 inches
  • Shipping Weight: 11.7 ounces
  • Average Customer Review: 4.1 out of 5 stars  See all reviews (7 customer reviews)
  • Amazon.com Sales Rank: #629,189 in Books (See Bestsellers in Books)


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Customer Reviews

7 Reviews
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Average Customer Review
4.1 out of 5 stars (7 customer reviews)
 
 
 
 
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34 of 34 people found the following review helpful:
5.0 out of 5 stars A must-read for anyone in the stock market, October 28, 2000
When I first started investing in stocks, I read two financial books with two very different slants on the markets. The first was Peter Lynch's "One Up on Wall Street" - a breezy, everyone-can-do-it, "buy what you know" feel-good primer. The second was this book, James Grant's "The Trouble With Prosperity", a real wake-up call to anyone who thinks that investing is easy, stocks ought to go up forever, and that the good times will always last. My investing life was probably spared several times over by Grant's book.

Let me spill the beans right here: the trouble with prosperity, in Grant's view, is that people begin believing it will never end. As a result, financial decisions begin to be made - both by individuals and by institutions - during prosperous times that are based on too rosy a view of the future. When reality sets in and conditions turn out not as expected, those poor decisions end up creating imbalances in the markets that need to be corrected before economic health can begin anew. So lenders made more and more unwise loans in the late 80's... leading to a banking crisis. Real estate values rise on speculation and then crash. We are seeing at this writing some wrenching corrections and volatility in tech stocks based on too-optimistic views of their future earnings. And the list goes on.

Grant's view of the corrections are that they are painful but necessary, sort of like the occasional brush fire that clears out the old undergrowth and allows for new growth to begin again. His is an urgently needed message in an age of electronic brokers and cheerleading financial media. Read and heed what Grant has to say to help guard against your own 'irrational exuberance' in whatever market you are in and to help see your financial future in light of both prosperous times and their inevitable corrections.

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6 of 6 people found the following review helpful:
4.0 out of 5 stars Superb book that explains financial markets, June 15, 1998
A great book. If you really want to understand how an economy functions, read this book. Explains, amongst other things, the currently flaccid state of the Japanese economy, and the issues with having the government (through the Federal Reserve) set interest rates. Also writes about historical precedents..remember the old saw about learning from history? An engaging, informative read.
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4 of 4 people found the following review helpful:
4.0 out of 5 stars Grant Was Right, January 10, 2003
According to James Grant, this is what goes wrong during good times: "Of all the consequences of sustained prosperity, none is so powerful as the delusion that markets always go up." Not many people wanted to hear that when it was first published in 1996. Which is probably why he added this redundancy: "They do not always go up."

Grant chronicles periods of boom and bust. He is effective at this. For example, he quotes The Journal of Commerce during a bear market in 1952: "Many bankers visualize a return to the conditions of 150 years ago, when many sections of Wall Street and environs were residential and retailing districts." It's difficult to imagine that Wall Streeters would be that bleak. It's also difficult to imagine that investors would be as unrealistic as they were in the 1990s: "In response to warnings that dividend yields were too low, or that price-earnings yields were too high, the public only invested more, thereby sending yields even lower and price-earnings multiples higher." Four years after Grant wrote that the S&P 500 began to decline.

The Trouble with Prosperity is not a "how to get rich book" for "dummies" or "idiots." This is a serious discussion of financial history which gets heady at times. For instance, the author applies theory from the Austrian school of economics. "In the Austrians' judgment," he explains, "there is one principal source of collective error: interest rates. Set them too low and people will overreach." The central bank is the culprit. "The quarrel I have with the Federal Reserve", proclaims Grant, "is not so much that it creates credit as that it pretends to know the interest rate at which that credit (in the form of bank reserves) should be lent and borrowed." Alan Greenspan, in other words, is not omniscient.

James Grant is not a cheerleader for the stock market. He is a genuine contrarian, a skillful writer, and he was right.

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Most Recent Customer Reviews

4.0 out of 5 stars Contrarians of the World Untie
James Grant is a stock market analyst and historian of Wall Street. In the Trouble with Prosperity, he recounts investment movements in the United States during the twentieth... Read more
Published on July 13, 2006 by Hans Haneberg

5.0 out of 5 stars A Primer on the History of Modern US Economics
History has a way of repeating things. Our economy is NO exception. James Grant writes a great book on the history of money,interest rates and the stock market in this country... Read more
Published on June 2, 2003 by obiwoncanoby

2.0 out of 5 stars Grant couldn't have been more wrong.....
I'm sitting here in August of 2002, looking at Jim Grant's 1996 prognosis for the stock market. At the time he presumably was writing his book, the NASDAQ (the major... Read more
Published on August 21, 2002 by David A. Marks

5.0 out of 5 stars A witty and richly informative account...
... of the cyclical nature of the financial markets and the folly that afflicts its participants.

After you've read all of the "buy-and-hold" pulp nonsense, pick up... Read more

Published on October 18, 1998

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