Irrational Markets and The Illusion of Prosperity Review

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(More customer reviews)In Irrational Markets and the Illusion of Prosperity, author Don DeVitto makes a VERY COMPELLING argument why Americans are experiencing one of the greatest speculative eras in recorded history. DeVitto combines his extensive knowledge of historical periods of severe speculation, in particular the 1920s in America and the 1980s in Japan,with almost 20 years of working "on the front lines" with individual investors, to draw a very insightful, yet sobering picture.
DeVitto writes: "Investors are now looking back at the reality of the last decade rather than forward to the risks that lie ahead." He argues quite convincingly that "the deflationary risks in today's global economy are more pronounced than at any time since the 1930's."
DeVitto reveals that our passion for stocks, combined with an ever-increasing debt burden at both the individual and corporate level, have left our nation with little wiggle room should we experience a recession of any lasting duration. He argues that as the "wealth effect" begins to evaporate,the confidence or psychology of most investors will erode,and, as consumers, will quickly discover that both their capacity and desire to buy goods and services have diminished markedly.Given that consumers represent 2/3 of the economy, it doesn't take a nuclear scientist to figure out what can happen to corporate earnings, which, ultimately, are a stock's only lifeboat.
DeVitto writes in plain english and incorprates his graphs in a very user-friendly way, making the book accessible to all readers. Irrational Markets is a very smooth read, and at under 200 pages can be incorporated into even the busiest of schedules.
Despite the fact the NASDAQ is currently 50% off its highs reached in March of 2000, this book is no less timely. In fact, should some of the concerns raised by DeVitto become a reality, most Americans will be elated to return to their February 2001 account values.
DeVitto's book is A MUST READ for any equity investor, especially bullish investors like myself who have embraced technology stocks with the same passion a 16 year-old boy embraces his prom date. I'm confident readers will find this book well worth their time and the investment (the price of the book and a bottle of TUMS)as it will serve as a much needed yield sign through the frenetic intersection of Equity Street and Net Worth Avenue, Pamplona, USA.

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"Irrational exuberance"--the now-famous utterance of Alan Greenspan, referred to the seemingly unending upward spiral of the stock market. Of course, as every investor knows, the stock market plummeted after this comment was made, only to recover and exceed every known record over the next year. Nothing, it appears, could keep this market down: not inflation worries, concerns over the Asian economic crisis, lack of earnings in many companies, nor elevated stock prices. Nothing, it seems, could stop investors in their passion for bidding up prices of stocks, especially technology and telecommunications.But beware: IRRATIONAL EXUBERANCE AND THE ILLUSION OF PROSPERITY warns that Americans are living in an economic dreamland, and that the long bull market and low unemployment have made us immune to economic reality--in short, we're in for a rude awakening. Based on extensive research, this provocative book is sobering reading for any current or would-be investor.

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