Irrational Exuberance
In *Irrational Exuberance*, Nobel Prize-winning economist Robert J. Shiller dissects the speculative bubbles that inflated global stock and real estate markets in the late 20th century, starting with Alan Greenspan’s iconic 1996 speech that coined the term. Shiller argues these bubbles aren’t driven by rational economic fundamentals alone—they’re fueled by psychological biases, media hype, and self-reinforcing feedback loops where rising prices boost investor confidence, drawing more participants into the market regardless of asset value. He challenges the dominant efficient market theory, using historical data to show how stock prices wildly outpace corporate profits and dividend growth, and extends his analysis to real estate, highlighting cross-national bubble patterns. The book also explores cultural shifts, gambling’s influence on risk tolerance, and 'new era' narratives justifying unsustainable surges, ending with practical strategies for investors and policymakers to mitigate bubble risks.