Toward Rational Exuberance: The Evolution of the Modern Stock Market

The stock market is big news today. Over 50 percent of the American public own stocks directly or indirectly, meaning that the financial well-being of tens of millions of people is directly tied to the market. Alan Greenspan has stated that it is not possible to understand the modern economy without understanding the stock market. But this has not always been so.

Many people now alive can remember a very different time, when the stock market was little more than a primitive insiders' game, viewed by most Americans with skepticism and suspicion. In Toward Rational Exuberance, B. Mark Smith, a professional stock trader with two decades of practical experience, tells the story of how this stunning transformation occurred. It is a fascinating story, involving colorful personalities, dramatic events, and revolutionary new ideas. In the course of the narrative, Smith traces the evolution of popular theories of stock market behavior, showing how they have greatly influenced the way the investing public views the market. But he also shows how some of these theories are based on faulty interpretations of market history that may lead investors astray. Freshly updated, this is a timely -- and definitive -- account of the market's true history and dangerous myths.

B. Mark Smith was a professional stock trader for nearly two decades, first with CS/First Boston Corporation, where he became a director, then as a vice president of Goldman, Sachs & Company.