Book Review: A History of the US in 5 Crashes

history of us in 5 crashesA History of the United States in Five Crashes describes the 1907, 1929, 1987, 2008, and 2010 stock market crashes. Scott Nations’ thesis is that crashes tend to follow a pattern where some new financial construct causes investors to let their guard down. The false sense of security allows for a rapid market run, then some event triggers it to come crashing back down. The introduction of algorithms and computer-directed trading has also sped up this process and created new vulnerabilities in the market.

The 2010 Flash Crash doesn’t fit as well into the formula as the others. The market quickly recovered and did not have the lasting impact that the other four had. It probably could have been left out of the book.

This book was an interesting read with details from all five crashes that I was unaware of. At times Nations goes back into events decades ahead of a crash to thoroughly explain how everything came into place. It is a different approach from books that tend to focus on economic or technical aspects of market crashes.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s