A Short History of Financial Euphoria by John Kenneth Galbraith is a classic investing book that highlights the most exuberant moments in financial history.
So in this book review of A Short History of Financial Euphoria I’ll tell you everything you need to know. That way, you can decide for yourself if this is the right investing book for you.
And to be honest, I can’t actually remember how this book came up on my radar. But it had been lingering in my Amazon shopping cart for awhile so I finally pulled the trigger. And I’m very glad I did.
Read on to learn why.
What “A Short History of Financial Euphoria” is All About:
A Short History of Financial Euphoria is exactly what it sounds like. For starters, the book is short! It comes in at just over 100 pages. And the font size is pretty big too. You can easily finish this book in a day. So if you’re intimidated by encyclopedia-size texts, then A Short History of Financial Euphoria could be right for you
But just because it’s short…
Doesn’t mean this book isn’t valuable! The author does a fantastic job recounting all the famous market bubbles over the years: from Tulipmania onwards. But this financial history book also does a great job of helping you extract invaluable lessons from the annals of time.
A Short History of Financial Euphoria starts out by introducing the concept of bubbles. Galbraith explains that when (1) “a new era” and (2) excessive leverage combine with (3) the arrogant intelligence and ambition of capitalists, we are headed for a euphoric blow-off top that is sure to collapse.
A Short History of Financial Euphoria also notes that, for the most part, really big bubbles tend to be 30-40 years apart. The author observes bubbles are more likely to form when a new generation starts making the decisions, and consider themselves too smart to make previous mistakes.
From there, the book profiles a series of classic bubbles. Each chapter explores a euphoric market rise. Again and again the book illustrates the forces that inflate, and inevitably pop, the bubble in question. And the author really does you a favour by pointing out the fatal flaws in play, which is valuable.
The other neat thing about this book is that it has stood the test of time. The author was born (in Canada!) in 1906. And he lived through a number of bubbles himself. The original version of A Short History of Financial Euphoria was published in 1990 and the version I’m reviewing was published in 1993.
But there’s another part of this book that’s worth talking about too…
The Best Part of A Short History of Financial Euphoria:
I think my favourite part of A Short History of Financial Euphoria was the humour. I read the book in a couple of hours, not only because it was short. But because once I started reading I couldn’t put it down. I can’t put my finger on it…
But this book was a hilarious read. Maybe it has to do with making fun of how people consistently lose their shirts on absolutely absurd speculations. Regardless, you’re sure to chuckle along and shake your head. Seriously!
The book was fast-paced, well-written and absolutely entertaining. The author’s tongue is firmly planted in-cheek. It’s always nice when finance books aren’t an academic tome (in contrast to Security Analysis). Especially as the summer months come upon us, a quick and easy financial read is always nice to have at hand. For this, A Short History of Financial Euphoria fits the bill perfectly.
For More Financial History:
The one drawback of A Short History of Financial Euphoria is that it’s so short. The book doesn’t dwell too much on the details of each financial crisis, panic or depression. Instead, the book flits from one disaster to the next connecting the common causes. I think this approach is effective. But I imagine there are some readers who’d want a little more.
Most of the juicy details in A Short History of Financial Euphoria are excerpts from another book that I’d previously reviewed. So for readers that really want to dive deep into the psychology of crowds, bubbles, and panics you will want to check out Extraordinary Popular Delusions and The Madness of Crowds, by Charles Mackay.
Where A Short History of Financial Euphoria comes up short, this book fills in the blanks. That said, I still the former is probably more than enough for most people. Make sense?
Great, now let’s draw this book review to a close…
A Short History of Financial Euphoria – The Final Word:
A Short History of Financial Euphoria is a really great book. It’s quick, easy and fun to read. What more could you ask for, right? Well, for those reasons and many more I encourage you to pick up this book on Amazon.com today.
If you’re still feeling a little unsure, you might also want to check out the video book review below. I shot the video right after finishing the book so take a look to get my immediate impressions.