The Equity Culture: The Story of the Global Stock Market

Customer Reviews

This is an excellent overview, and he is to be commended for managing to avoid the temptation to stray too far from the main story line. After all any number of tributary topics he covers might well themselves provide the basis of another volume -- including, the role of central banks in crisis periods, the growing influx of pension dollars into equity markets, the co-variance of global markets and, of course, the recurring problem, most recently manifested by Enron and the Italian holding company, Parmalatt(?), of efforts to conceal losses through accounting machinations (see Japan's version in the discussion of Sanyo Special Steel (184-185). I think there is a small error regarding the U.S. crash and that is that "Black Tuesday" was October, not November 29th (see page 126), 1929. Not a big mistake when one bears in mind Galbraith's comment that the singular feature of the crash of 1929 was that the "worst continued to worsen." Overall, an excellent, very readable introduction to the global evolution of equity markets. Stay tuned, though, this history continues to evolve.....

B. Mark Smith gives the reader a history and economics refresher in the Equity Culture: the Story of the Global Stock Market. The book, 352 pages, is not hard to read and provides an interesting historical overview of the equity markets. Smith, a former stock trader with FS/Boston and Goldman Sach, is also the author of Toward Rational Exuberance: the Evolution of the Modern Stock Market.

In the Equity Culture, Smith traces equity market activity from the Mississippi Company in the 18th Century to the more academic and sophisticated computer models of today. Through it all, Smith shows the reader that while times may change, human behavior around a rising equity market does not. The real thesis of Smith's book is that equity market bubbles and busts contain three consistent historical trends(1) a new product or development; (2) increased purchasing activity by professional investors in the company or companies selling or providing the new product or development followed by investment by an expanding pool of inexperienced investors; and, (3) easy credit. Each significant downturn in an equity market, from the Romans to the recent technology bust, are preceded by these market elements, according to Smith.

The Equity Culture provides an interesting and wide angle view of the seemingly senseless ups and downs of the equity markets. The book is no novel, but Smith makes what most would consider a pretty dry subject an interesting read. For market veterans, the book provides good perspective; for market rookies a good lessen: look out!!

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