DEVIL TAKE THE HINDMOST

Cautionary armchair reading for the modern investor. The old mantra about history repeating itself has clearly inspired British financial journalist Chancellor (a contributor to the Financial Times and the Economist) to write this book at this point in time. Although many volumes have already appeared on both financial speculation in general and individual historic events in particular, even well-informed readers will find new material and interpretation here. From tulip bulbs in 17th-century Holland to the American stock crash of 1929—and pointedly including the current boom in Internet stocks’speculation is presented by Chancellor as a common and very human behavior involving all classes of people. The author weaves together a descriptive narrative of major episodes with retrospective analysis by various authorities—indeed, the change in “expert” opinion is often as intriguing as the manipulations of the speculators themselves, since over time conventional wisdom on almost all of these events has evolved. The most prominent and notorious speculators (Cornelius Vanderbilt, James Fisk, and Charles Keating, among others) earn biographical profiles in the text. Chancellor opens his financial adventure story with a rational and articulate description of speculation, then along the way introduces ever-more- convoluted investment strategies and practices, accompanied by articulate descriptions of terms. His book therefore provides a running primer on basic investment concepts alongside the tales of greed, political shenanigans, shrewd maneuverings, and obsession. The author largely succeeds in being fair to the variety of interpretations given to speculation, including opposing calls for looser and stricter controls. He has some misgivings, however, about the current prevailing belief that the market is “inherently efficient” and best suited to manage itself, at least in the long run. Chancellor closes with an admonition: “As an anarchic force, speculation invites government restrictions yet it is only a matter of time before it slips its chains and runs amok.” Timely, beautifully written, ruthlessly informative.