Rating: 
Summary: A dry subject made interesting
Review: A key debate among economists is just how "rational" markets are. One school says they are completely rational, immediately absorbing all available information into the pricing of the items traded in each market. Others (with far fewer followers these days) say markets are far from rational, needing massive government intervention. The terriory between these two viewpoints is most likely where the "truth" lies.Smith takes an interesting, very focused approach to this debate. His focus is the history of the U.S. stock market; his thesis is that the market is getting closer to rational perfection with each passing decade. The result is an eminently readable book. In his march through twentieth century stock market history he introduces us to a host of characters - some are famous names you will already know; others are les well known scoundrels that taught lessons valuable to those who police the market. Smith's story also introduces, and explains, various investment strategies and fads, placing each in historical context. If you already have a doctorate in economics, this book may teach you little. But if you read history, business and economics titles because you want to, not because you have to, buy this book.
Rating:
Summary: Must Read Material
Review: Mark Smith has succeeded in writing one of the best histories of the stock market certainly in recent times and maybe of all time. The book has rich descriptions of many of the individuals and companies that have shaped the market over the years. But much more importantly, the book has a coherent, important message. Smith argues, quite persuasively, that the history of the stock market can be seen as a continual (if sometimes bumpy) upward movement in the valuation measures applied to the market. Smith brings us back to the days when common stocks needed to YIELD more than bonds because they were riskier. He then traces the advance of P/E ratios all the way to the present. Although I am still unconvinced by his arguments that the markets of the late 20s and late 60s were not bubbles (he seems to almost make bubbles definitionaly impossible), this book is a valuable contribution to the current debates about the state of the market. This is not a get-rich-quick book or a how-to manual, but the story Mark Smith lays out is vitally important to all investors and is an enjoyable read to boot. Highly Recommended.
Rating:
Summary: Must Read Material
Review: Mark Smith has succeeded in writing one of the best histories of the stock market certainly in recent times and maybe of all time. The book has rich descriptions of many of the individuals and companies that have shaped the market over the years. But much more importantly, the book has a coherent, important message. Smith argues, quite persuasively, that the history of the stock market can be seen as a continual (if sometimes bumpy) upward movement in the valuation measures applied to the market. Smith brings us back to the days when common stocks needed to YIELD more than bonds because they were riskier. He then traces the advance of P/E ratios all the way to the present. Although I am still unconvinced by his arguments that the markets of the late 20s and late 60s were not bubbles (he seems to almost make bubbles definitionaly impossible), this book is a valuable contribution to the current debates about the state of the market. This is not a get-rich-quick book or a how-to manual, but the story Mark Smith lays out is vitally important to all investors and is an enjoyable read to boot. Highly Recommended.
Rating: 
Summary: Toward Stock Market Apology
Review: Mark Smith, a Goldman Sachs and Wall Street veteran, takes an entire book to attempt to get across the point that stocks should be valued based on future earnings, and are (were) not overpriced in the late 90's. The book was composed during the late 90s and early in 2000, during the biggest stock market bubble of all time. He carries a major grudge against Jessie Livermore, and John Kenneth Galbraith, and takes every opportunity to throw in a "cut" on these 2 historic figures. Seems obvious why he carries a negative torch for Galbraith. Galbraith devotes a chapter in his mid 50's book The Great Crash 1929 to Goldman Sachs participation in Wall Street Chicanery though several investment trust schemes. Galbraith's treatment of Goldman was based on fact. More respect for Galbraith's views should have been shown. Seems the overall point of the book is that no price is too high for stocks, and that you can't beat the market using technical analysis or fundamental analysis. His halting of his narrative to provide a physical description of characters are both annoying and distracting. Its an obvious attempt to bring some sort of writing style to his descriptions which are clearly not there. Smith goes to great lengths to make a case for stocks being not overvalued in 1929, the early 70's (during the nifty fifty popularity), and before the 1987 crash. However, he fails to look back on whether the earnings and dividends produced by companies after these times would have justified these valuations. Such an analysis would have made this book valuable. Instead we get late 90's rhetoric to support his case. He suggests that increased "productivity" through technology justifies higher p/e's. This garbage logic is coming back as the market rallies in late December 2003. Such logic was also used in the 1990s bubble era, just as productivity increases from the prohibition was used to support 1929 bubble valuations. I would suggest saving your money for now, and reading this book after the next stock market calamity which is coming to your neighborhood soon. The book will then be good for a few laughs.
Rating:
Summary: Thoughtful Review of The Stock Market
Review: Since it now appears that the laws of economics do indeed still apply to the U.S. stock market, it seems a good time to brush up on the history of Wall Street. Such a look back is especially important to the millions of investment bankers, brokers and individual investors who cut their teeth in the "irrational exuberance" of the `90s and are now catching their first real glimpse of the bear. B. Mark Smith's comprehensive history of the U.S. equity market demonstrates, if nothing else, that this ain't the first time a bubble's burst and it sure won't be the last. The beauty of Smith's book derives from his ability to link the development of the market with the history of the times. He begins with the founding of the first exchange in the late 1700s and traces the market's increasingly powerful role through the last century, when it helped fuel modern technological and economic growth. The book is especially intriguing when it discusses the relatively unknown early years of the market, before its big crash in 1929. We [...] recommend this fascinating history to executives, financiers and academics, as well as to a broad audience of history buffs, even those with little knowledge about stocks.
Rating:
Summary: Excellent Background Material for Investors
Review: This book deals with the events shaping the modern (US) stockmarket. Although there is a chapter on the "early" days (up to 1900), the meat of the book concentrates on the 20th century. It is absolutely fascinating to read how all of the institutions and rules that investors are confronted with on a daily basis came into existance not that long ago for very good reasons. On the way, the author argues against some well-entrenched historical myths. The book is well-written and as such pleasant to read. It should however be borne in mind that someone who has no background in the stockmarkets whatsoever may not grasp everything being discussed here. However, this adds to a healthy academic standard of the book that is underlined by the many references to further background material. Those who are invested in the stockmarkets will emerge from reading this book enriched by the knowledge that many things that we see today have been with us before and that many statements still heard today have been disproven twenty years ago.
Rating:
Summary: A market history that fills in the blanks
Review: This is an excellent objective history of the evolution of the US stock market. Smith takes us on a colorful and fascinationg journey, introducing us to the people, the politics, and the events which shaped the modern market. Unlike many authors, he does not try to nail down universal truths. He rather shows the ways the market has evolved from a gambler's playground to one of the major shaping forces of the US economy. He gives very cogent arguments against some of the strongly held beliefs, both optimistic and pessimistic, about today's market. I learned a lot and enjoyed the read.
Rating:
Summary: outstanding
Review: This is an excellent, very readable history of the New York Stock Exchange from its nascence, in the 1790's, until just recently. B. Mark Smith traces the efforts over that period by market officials and government regulators to restrict and punish the shenanigans that dishonest traders and companies can dream up and of analysts to try and figure out precisely what drives market valuation. Steering a middle ground between the pessimism of Robert Schiller's Irrational Exuberance and the optimism of James K. Glassman's Dow 36,000, Smith seems to play the facts pretty straight and to cautiously advocate the view that the market, and specifically the value placed on stocks, has become increasingly rational over time. The importance of his thesis, however gingerly proposed, becomes obvious when he makes the point that the Market has gone from being perceived as a somewhat crooked den of speculation to the single most important investment venue for the great mass of Americans. This radical change has been so gradual that it is easy to ignore, but Smith's book makes it clear just how humongous a factor it is in modern life. Consider for a moment the very real prospect that Social Security will, over the next generation, become a largely private, stock based retirement system. At the time that Social Security was created, this idea would have been dismissed as a form of dementia. The one weakness of the book, and it is a weakness of market forecasters in general, is that it largely ignores such political realities in analyzing stock values. For the truth of the matter is that even if stocks are overvalued right now, three major factors are about to be brought to bear on the market : (1) Tax Cuts : Already well off, the American people will, over the next few years, be getting ever larger shares of their tax dollars back and that money is going to end up somewhere. Considering our already elevated standard of living, retirement accounts seem a likely destination. (2) Permanently Balanced Budgets : Though it has virtually escaped the notice of most people, we face a situation where Federal bonds may cease to exist and where there is no competition from government for loan money. This will both put tremendous downward pressure on interest rates and remove bonds as an investment vehicle. Both will drive investors toward stocks. (3) Privatization of Retirement : This process, already well under way, will see increasing reliance on 401k and similar types of retirement accounts, and the eventual transfer of Social Security accounts to private control. Here too, investors are likely to seek the type of returns that only stocks can offer. Add to these : the growth of Free Trade; the rapidly accelerating movement of most nations toward free market capitalism; and the huge productivity still to be realized as the entire planet becomes computerized; and you have a recipe for a long term global economic boom and a favorable climate for stock investment as far as the eye can see. Smith avoids such speculation, which allows him to be impartial in critiquing both Schiller and Glassman, but it is important to remember that the midpoint between two extremes is not necessarily correct simply because it is moderate. Often the truth will lie much closer to one extreme than the other. In this case, it seem likely that we'll see Dow 36,000 much sooner than we'll see a 1930s style collapse. But even if..., it is also important to recall that if you bought stocks in the 1930s and held onto them, you would have become a very rich man. In fact, in one of the most startling statistics in the book, Smith points out that if you bought the S&P 500 at the top of the market in 1987, despite the precipitous October plunge, you still would have realized a 13% return over the next ten years. Of such stuff is rational exuberance made. At any rate, this is a first rate examination of the growth of, and changes in, the stock market over its two hundred-plus years, particularly valuable for non-experts, like me, who are headed into a future where more and more of our wealth will be invested there. And if Smith is a tad cautious, perhaps that caution is appropriate to a history book. GRADE : A
Rating:
Summary: outstanding
Review: This is an excellent, very readable history of the New York Stock Exchange from its nascence, in the 1790's, until just recently. B. Mark Smith traces the efforts over that period by market officials and government regulators to restrict and punish the shenanigans that dishonest traders and companies can dream up and of analysts to try and figure out precisely what drives market valuation. Steering a middle ground between the pessimism of Robert Schiller's Irrational Exuberance and the optimism of James K. Glassman's Dow 36,000, Smith seems to play the facts pretty straight and to cautiously advocate the view that the market, and specifically the value placed on stocks, has become increasingly rational over time. The importance of his thesis, however gingerly proposed, becomes obvious when he makes the point that the Market has gone from being perceived as a somewhat crooked den of speculation to the single most important investment venue for the great mass of Americans. This radical change has been so gradual that it is easy to ignore, but Smith's book makes it clear just how humongous a factor it is in modern life. Consider for a moment the very real prospect that Social Security will, over the next generation, become a largely private, stock based retirement system. At the time that Social Security was created, this idea would have been dismissed as a form of dementia. The one weakness of the book, and it is a weakness of market forecasters in general, is that it largely ignores such political realities in analyzing stock values. For the truth of the matter is that even if stocks are overvalued right now, three major factors are about to be brought to bear on the market : (1) Tax Cuts : Already well off, the American people will, over the next few years, be getting ever larger shares of their tax dollars back and that money is going to end up somewhere. Considering our already elevated standard of living, retirement accounts seem a likely destination. (2) Permanently Balanced Budgets : Though it has virtually escaped the notice of most people, we face a situation where Federal bonds may cease to exist and where there is no competition from government for loan money. This will both put tremendous downward pressure on interest rates and remove bonds as an investment vehicle. Both will drive investors toward stocks. (3) Privatization of Retirement : This process, already well under way, will see increasing reliance on 401k and similar types of retirement accounts, and the eventual transfer of Social Security accounts to private control. Here too, investors are likely to seek the type of returns that only stocks can offer. Add to these : the growth of Free Trade; the rapidly accelerating movement of most nations toward free market capitalism; and the huge productivity still to be realized as the entire planet becomes computerized; and you have a recipe for a long term global economic boom and a favorable climate for stock investment as far as the eye can see. Smith avoids such speculation, which allows him to be impartial in critiquing both Schiller and Glassman, but it is important to remember that the midpoint between two extremes is not necessarily correct simply because it is moderate. Often the truth will lie much closer to one extreme than the other. In this case, it seem likely that we'll see Dow 36,000 much sooner than we'll see a 1930s style collapse. But even if..., it is also important to recall that if you bought stocks in the 1930s and held onto them, you would have become a very rich man. In fact, in one of the most startling statistics in the book, Smith points out that if you bought the S&P 500 at the top of the market in 1987, despite the precipitous October plunge, you still would have realized a 13% return over the next ten years. Of such stuff is rational exuberance made. At any rate, this is a first rate examination of the growth of, and changes in, the stock market over its two hundred-plus years, particularly valuable for non-experts, like me, who are headed into a future where more and more of our wealth will be invested there. And if Smith is a tad cautious, perhaps that caution is appropriate to a history book. GRADE : A
Rating:
Summary: Well written and useful
Review: This well written book helps provide perspective on the last 100 plus years of stock market history. But this is no dry account of dead white men and their machinations. Instead, the book proved useful to me on many levels. First, in describing how and why the stock market originated, it helps validate the concept of investing in the stock market. This may seem obvious, but I think that for many, many people, their fear of the market holds them back from their financial goals. Secondly, the book gives the reader much-needed perspective. Getting caught up in the day-to-day movements of the Dow or SP500 is easy. This book provides a longer-term view of the market. Third, there is a point to the whole book. Smith's thesis is that the stock market, much like a living creature, has evolved over the years. Old ways of measuring stock valuations are no longer valid. For example, the widely held belief that the dividend yield of stocks should always exceed that of bonds to make them worth owning. Indeed, the title "Towards Rational Exuberance" is aimed at detrators who insist that the market is irrationally valued. Smith shows that using discounted cash flow puts a new light on stock valuations. The last few chapters are especially useful because they describe recent stock market history, as well as Alan Greenspans role. A minor issue I have with the book is that it seems to go along with the "this time it's different" school of stock valuation. But Smith definitely puts his case forward very eloquently. I recommend this book to anyone interested in stocks and investing. A great read.
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