In this timely and prescient update of his celebrated 2000 bestseller 'Irrational Exuberance', Robert J Shiller returns to the topic that earned him international fame: market volatility. Having predicted the stock market collapse that began just one month after the first edition was published, he now expands the book to cover other markets that have become volatile, particularly the recently red-hot housing market. He includes a full chapter on domestic and international housing prices in historical perspective.
Shiller describes clearly the psychological origins of volatility in financial markets and amasses impressive evidence to support his argument that the recent housing market boom bears many similarities to the stock market bubble of the late 1990s, and could lead to declining home prices for years to come. After stocks plummeted when the bubble burst in 2000, investors moved their money into housing which caused inflated real estate prices in America and around the world. Irrational exuberance did not disappear - it merely reappeared in other settings.
He concludes by offering solutions to this troubling condition: better-designed public institutions such as a revamped social security system, new forms of insurance to protect people's incomes and homes, and a broader array of investment options. This new and updated edition of 'Irrational Exuberance' is vital reading for home-owners and small investors, as well as investment fund professionals and is destined to be widely read, discussed, and debated.
