Irrational Exuberance by Robert J. Shiller Book Review

This book was on my list of five books to read for 2019 as part of my personal finance resolutions.  I have only two more books on my list left to read until the end of the year.  I initially borrowed the 2015 edition of the book from the library and then had to return it because someone else wanted to read it.  I found an older version online and finished the older version of Irrational Exuberance (the year 2000 version). Here’s my Irrational Exuberance book review

Here’s my review of Irrational Exuberance, but first, who is Robert J. Shiller?

Who is Robert J. Shiller?

Robert J. Shiller is an economist and a professor a Yale University.  He received a Nobel Prize in Economics in 2013.  He wrote Irrational Exuberance and had it published in 2000.  He was born in the USA but his ancestry is from Lithuania.  His primary focus is as a behavioural economist.

He has a Twitter account if you’re interested in following him.  He has over 136,000 Twitter followers.

Irrational Exuberance Summary

When I read the first few chapters of the book, you could definitely tell that this was written by an economist!  Irrational exuberance is about how bubbles form when the prices of stocks or real estate do not correlate with the fundamental price.  Because market psychology is such a strong factor, prices end up being high and unsustainable, and then the bubble bursts and panic selling ensues.

He reviews the bubbles of the stock market and also of the real estate market.

What I Liked about Irrational Exuberance

I liked that Irrational Exuberance (similar to A Random Walk Down Wall Street by Burton G. Malkiel) went throughout history to review the examples of bubbles that occurred.  One such example that was the same as A Walk Down Wall Street was the tulip and bulb bubble craze in Holland in the 1630’s.  This bubble still boggles my mind!

I also liked that the author went in detail and analyzed the reasoning behind market bubbles and how they occur and what patterns emerge when they occur.  He goes into detail about the psychological factors that are behind bubbles.  Unfortunately the author doesn’t spend much time explaining what could be done to help fix this issue.

Finally, I liked that the you could see how many examples he gave to show the bubbles (such as real estate bubble, stock market bubble) bursting.

What I Didn’t Like About Irrational Exuberance

I found Irrational Exuberance a little dry to read, maybe it was because it was so detailed and the style of writing was not my cup of tea.  It was a good book on explaining the why and what of Efficient Market Theory, though.

I don’t think I would be a diehard fan and read it again though.  I didn’t like how he didn’t provide many solutions to his analysis of market bubbles but just talked ad nauseum about them.

Irrational Exuberance is a good read if you want to learn more about bubbles and how they happen and why they occur and what the demographics are for them.  There is not much practical advice in this book but it’s still nonetheless packed with information for the beginner investor.

For other books for the beginner investor, here are 5 dividend investing books that might help you with your dividend investing journey.

Have you read Irrational Exuberance?

What is your Irrational Exuberance book review?

Get the Young Money Bootcamp PDF FREE

Free Dividend Yield Spreadsheet Tracker Download and Blog Updates

6 thoughts on “Irrational Exuberance by Robert J. Shiller Book Review”

  1. I read this book a few years ago and discovered Shiller from a documentary about the 2008 financial crisis. I thought he provides very detailed insight about the volatility of the market and behaviors behind it. I agree with you that book was dry on some parts but if you are really into the causes of economic bubbles then this book is for you.

  2. What a classic phase. I actually think Fed Chairman Alan Greenspan really popularized the phrase during that time even though Shiller wrote the book. I haven’t read it, but Shiller gets a lot of press here in the states for his thinking on economics, the markets, etc. Tom


Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.