Devil Take the Hindmost: a history of financial speculation - Edward Chancellor (Penguin Putnam, 2000)

As long as markets have been part of Western society, there have been periods of frantic speculation - of bubbles - that have destroyed some of their participants when the world suddenly changed.  This is a history of some of these events.  [332.645]

A colleague who worked as a financial advisor once told me that he gave a copy of this book to every new client.  In looking over this book again, I must admit that he was acting in his clients' interest if his intention was to warn them about the likely tears that would follow any enthusiasm for the next sure thing. 

The text covers the major speculative frenzies from the South Sea Bubble to the Asian crisis of 1997.  In each, one meets knaves and swindlers and deluded crowds who are driven to get rich easily with their, usually, small capital.  The story always ends up the same, but often in new ways each time.  The catalogue of disasters is long; it includes the South Sea Bubble, the railway mania of the 1840s, the market manipulation of the Gilded Age, the Crash of 1929, the shady trading of the 1980s, and the Japanese collapse of the 1990s.

The author does more than recite the sequence of events.  He adds a commentary that brings many of these stories to bear on current attitudes.  For example, Chancellor draws a set of parallels between the attitudes and approach of the investor in the 1920s bull market and those of the investor of the 1990s.  Such texts remind us of why history is so important.

This book is highly recommended.