Mr. Market always miscalculates and the author of this book predicted the housing bubble that burst last year. This book is a collection of Grant's Interest Rate Observer letters from 1990s to the present economic crisis. He mainly blames human nature for leading us to where we are today. He says that the cause that led to the housing and stock market bubble was the lenders' willingness to loan money to speculators or house flippers. It was not the low interest rate policies of the Fed as many might believe. However, our regulators are not without fault. They set the stage in the 1970s with the deregulation of financial markets.
I really liked the author's description of the financial instruments, especially CDS derivatives. Even if you are not a financial expert, you should be able to understand it because the author has described it in simple terms. Although there is so much evidence supporting the idea that Mr. Market miscalculates, I am amazed at how many institutional investors believe in efficient market theory and have managed their investments through indexing.
- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market