{"id":11144,"date":"2021-10-27T12:00:45","date_gmt":"2021-10-27T10:00:45","guid":{"rendered":"https:\/\/captrader.excellents.eu\/?p=11144"},"modified":"2024-03-27T14:16:20","modified_gmt":"2024-03-27T13:16:20","slug":"the-history-of-speculative-bubbles-by-john-kenneth-galbraith","status":"publish","type":"post","link":"https:\/\/www.captrader.com\/en\/die-geschichte-der-spekulationsblasen-von-john-kenneth-galbraith\/","title":{"rendered":"A short history of financial euphoria by John Kenneth Galbraith"},"content":{"rendered":"
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The History of Speculative Bubbles by John Kenneth Galbraith is a timeless classic on the psychology of markets, which has now been reprinted by B\u00f6rsenbuchverlag. I was really looking forward to it, because the old editions have all been out of print and it always makes me very happy when high-quality old knowledge is refined again. This book describes and analyzes the psychology behind four centuries of greed and panic on the stock markets. With many highs and especially some lows, from which we never seem to have learned.<\/p>\n\n\n\n

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\"Then people will rediscover the oldest law of Wall Street: Financial geniuses are geniuses until the day they go bankrupt.\"<\/em> <\/p>\nJohn Kenneth Galbraith<\/cite><\/blockquote>\n\n\n\n

Thus, the exaggerations in the markets line the time of the capital markets until today. John Kenneth Galbraith, one of the great economists of the 20th century, set out to find an answer in this book. To do so, he took a close look at the financial catastrophes of the last four centuries. He not only describes them, which can be exciting enough for investors, but also tries to find parallels, characteristics and indicators to anticipate such scenarios in the future. Thus, we learn not only about the tulip mania of the 17th century, but also about the South Sea bubble in the 18th century and high-risk bonds in the 20th century.<\/p>\n\n\n\n

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\"Throughout my life I have modestly profited steadily from the speculative aberration which has more often than not been accompanied by madness. Only my unshakable character keeps me from welcoming such events as evidence of personal foresight and the source of a small financial reward.\"<\/em> <\/p>\nJohn Kenneth Galbraith<\/cite><\/blockquote>\n\n\n

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The particularly interesting thing is that the stories repeat themselves. With different actors, different objects of speculation, but essentially with similar mechanisms. In this classic book, the author explains why this is the case and, in a certain sense, why it has to be. The culprits include a poor memory with regard to past financial follies, excessive optimism, overconfidence, greed and herd behavior. And although his explanations are now over 120 years old, they are nevertheless as timeless as they are instructive, and the author's work has had a significant influence on the behavioral economics later founded by Daniel Kahneman.<\/p>\n\n\n\n

In general, John Kenneth Galbraith, who earned his doctorate at the University of California (Berkeley) and later taught at Harvard and Princeton, is considered one of the most influential economists of the 20th century. Later in his career, he was also appointed ambassador to India by John F. Kennedy.<\/p>\n\n\n\n

In the first preface in 1990, the author still spoke of his hope, \"That corporate managers, denizens of the financial world, and citizens of speculative sentiment, inclination, or temptation may be reminded that not only fools, but a great many other people, are repeatedly relieved of their money at times of speculative euphoria.\"<\/em> Later, however, he was convinced that the recurring speculative mania was part of the system.<\/p>\n\n\n\n

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\"Perhaps it would be better to recognize and accept this. The history of the great speculative booms and their aftermath changes in small ways - but much, much more remains the same.\"<\/em> <\/p>\nJohn Kenneth Galbraith<\/cite><\/blockquote>\n\n\n

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Although authors before him have already published on various speculative bubbles, only a few have analyzed them for common features. These common features and indicators are of particular interest, as they can be used to draw conclusions about future exaggerations and to gain a deeper understanding of the psychology involved.<\/p>\n\n\n\n

But John Kenneth Galbraith was always skeptical about whether even firm rules and economic knowledge could protect people, and even more so the financial world itself, from exaggerations. After all, in phases in which euphoria gets out of hand - especially in the face of reason - only very few people will (be able to) act rationally. The pull of the increasing prosperity of some or even of the broad masses leads to the emergence of a kind of group identity. And in this context Gustave Le Bon had already pointed out the challenges of rationality. Thus, consciously as well as subconsciously, it is only possible for the very few to preserve their own convictions under the pressure of the masses.<\/p>\n\n\n\n

Walter Bagehot is reported to have once said, \"People are most gullible when they are happiest.\" There's some truth to that. At least, I can see it every day in the financial bubble that, especially when it comes to success, the mind of many people stops working and they become beside themselves when it is pointed out to them that their success was most likely more a matter of chance than reason.<\/p>\n\n\n\n

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\"Euphoria is aided and abetted by the wishful thinking of those who are concerned only with justifying the circumstances by which those who can get rich can do so. And it is equally abetted by the tendency to ignore, expel, or condemn all doubters.\"<\/em> <\/p>\nJohn Kenneth Galbraith<\/cite><\/blockquote>\n\n\n\n

For me, a wonderful and timeless work about the excesses of the capital markets. A must for all people who are interested in the capital market, but also in history. A lot of psychological insights about people, masses and investing can be gathered from this, which in turn can be very helpful in the future.<\/p>","protected":false},"excerpt":{"rendered":"

Die Geschichte der Spekulationsblasen von John Kenneth Galbraith ist ein zeitloser Klassiker zur Psychologie der M\u00e4rkte, der nun im B\u00f6rsenbuchverlag nochmals neu aufgelegt wurde. Ich hatte mich schon sehr darauf gefreut, denn die alten Ausgaben sind allesamt vergriffen gewesen und es freut mich immer sehr, wenn hochwertiges altes Wissen nochmal veredelt wird. Dieses Buch beschreibt […]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[54],"tags":[],"class_list":["post-11144","post","type-post","status-publish","format-standard","hentry","category-literatur"],"acf":{"blog_summary":"","blog_faq_schalter":"nein","faq_uberschrift":"","blog_faq_loop":null},"_links":{"self":[{"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/posts\/11144","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/comments?post=11144"}],"version-history":[{"count":0,"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/posts\/11144\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/media?parent=11144"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/categories?post=11144"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/tags?post=11144"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}