Am höchsten bewertete kritische Rezension
4 Personen fanden diese Informationen hilfreich
Some main assumptions require support....
am 15. Mai 2000
I found the second half of this book to be better than the first.
Professor Shiller emphasizes two points: (1) US Stock prices are overvalued, and (2) stock prices have been driven high by psychological feedback. I've made the same speculation in my recent article The Futility of Utility, where I've pointed out that gambling in the market is essentially different from mechanical acts like tossing dice or drawing cards: the amount of betting on a stock determines a buyer's success or failure in the latter case, but certainly not in the former one.
The weakness of the book is the first claim, that stocks are very much overpriced. In support of that point he presents an impressive graph (pg. 8) of P/E vs. time from 1860-2000 that shows that typical market P/E's were around 25-35 just before the big US market crashes, historically, and that the present market P/E is around 45. The difficulty with the viewpoint is that he assumes that "value" makes sense, although he doesn't define "value" of a stock. Unless we can more or less uniquely define "value" we can't say whether a stock is overpriced or underpriced. This is a serious problem that has not been solved either by neo-classical economics or by modern finance theory. We would all likely agree that Intel at 30 would look cheap these days whereas Intel at 200 would not look cheap, but what is the "true value" of Intel?
I have argued in Futility of Utility that "Value" is undefined because it is not unique. Like the notion of price as a function of demand, it is a bad idea, both theoretically and empirically. Professor Shiller seems to have in mind the old pre-theoretical finance (pre-Osborne, pre-Black-Scholes) idea of dividend-discounted stock prices when he speaks of "value". This is a dead idea, still taken seriously only by a few professors within the academic economics profession. It's a useless notion because (1) no one buys stocks for dividends, and (2) it's impossible to define the idea of dividend-discounted price, because even next year's expected return is random and complex enough that it cannot be known or accurately estimated in advance. It is very easy to give at least three more definitions of "value", none of which agrees with the other three (see my larger review of Shiller's book on the June 2000 web site [...] What is missing in the book is pinning down the real reason why stock prices are historically high, and why business activity is at such a high level. My uneducated guess is that it has a lot to do with the amount of money in circulation, much or most of it credit-originated in one way or another.
Professor Shiller doesn't like traders. In his ideal world there are only rational long-term investors willing to settle for 3-5% a year, or whatever the rational market produces (people with enough money can certainly afford that luxury, and typically buy bonds). The book ends on a Spenglerian note, reminiscent of the Arrow-Debreu program in neo-classical economics and Merton's program of inventing hidden options: Professor Shiller wants to monetize a lot of stuff. In his rational world (part 5, "A Call to Action"), you could short Houston's booming housing market, the Japanese economy, the US economy, or whatever else you might want to choose. This is a call for an even greater free market/market freedom, based on the assumption that we, as economic animals, will benefits from fewer, not more, restrictions on markets, in (questionable) analogy with our functioning as voters in representative democracies.