Bubbles and Market Crashes

Market Crashes

In an earlier post, Brexit…Books that can help you prepare for market panic, I’ve recommended a booked called Irrational Exuberance 3rd Edition. I should say that I am glad that Brexit did not bring about a market crash, but just a knee jerk reaction. Having said that, I pondered upon a video clip featuring the author of the book Professor Robert J. Shiller who gave a very good insight about his studies of the market irrational behaviors.

Professor Robert J. Shiller, won a noble prize in 2013 for his empirical analysis of assets prices.

In his first edition released in 2000, called the “Millennium Boom”,  he warned that the long bull market run of the stock market in the 90s was a bubble and is driven by human psychology, not by real values. Weeks later, the market began to drop, declining by 40% over the next two years,

A few years later in 2005, Professor Shiller released a second edition of the same book, arguing that the housing market is the latest and greatest bubble. We all know how the prediction played out. Consumer demand drove the housing bubble to all-time highs in the summer of 2005, which ultimately collapsed in August of 2006.

In 2015, he realized his third edition, called “New Normal Boom” focusing on the bond market. Here’s a video clip link for you to learn a little more about his studies. I’ve also provided a downloadable copy of a presentation, not the exact one used in this video but close enough so that you can refer to the charts he was referencing.

Click here to save the presentation.


Click on the book to check out the reviews.




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