Are you interested in the stock market? Do you plan to start investing in it? Or have you burned your fingers in the real estate through rash decisions or wrong advice? Have you been swayed by hype and ads that lure you with the promise of quick riches?
Well, then, Madness of the Masses is a book you must read. History has proved time and again how get-rich- quick offers have fallen flat, leaving investors in a state of financial ruin.
However, we never seem to learn from history. When the next exciting scheme to get rich comes along, we fall for it all over again, leaving us in financial ruin, while the perpetrators of the scams, more often than not, laugh their way to the banks. These boom and bust cycles continue century after century.
In this book, author Sameer Rastogi makes a compelling case for how human greed and envy propel us towards financial ruin. He says, “I have witnessed investor emotions and biases during Booms and Depressions. With experience, I realized that most of the investor questions and investor biases didn’t have practical answers in pure investment research. It required out-of- the-box thinking. It required analysis of investor behaviour at large. It required a study of emotional forces like greed and fear… For investment success, the EQ of each investor
proved to be worth its weight in gold. Also, high investment IQ alone didn’t necessary translate into higher investment profits.”
Unlike most dry finance books, Madness of the Masses is peppered with interesting anecdotes from history detailing scams through the ages, making it a thought-provoking, fascinating read. A definite must-read for investors and potential investors as there is a lesson for each of us. The author says, “The bubbles and scams are not new. They have been in existence since the time humans have been greedy, jealous and fearful. The madness of the masses is here to stay. It is up to individuals to learn from the past and stand apart from the crowd.”
Historical evidences of our vulnerability to
Investment Bubbles and Scams
1. History is a great teacher, but we are not good students
2. Tulip Mania – How an entire nation went nuts over flower bulbs (circa 1637)
3. Mississippi Company Bubble – Anybody can get rich quick in France (circa 1717)
4. The South Sea Company – The Great Greed of Great Britain (circa 1721)
5. Railway Mania – The Gravy Train (circa 1845)
6. Florida Land Boom – Man-less Land for the Landless Man (circa 1925)
7. The Great Storm before The Great Depression (circa 1929)
8. Japanese Asset Bubble (circa 1986)
9. The Great Indian Thugs and their Tricks
a. PACL Scam
b. Saradha Scam
c. Stock Market and Banking Scam by Harshad Mehta & Ketan Parekh
d. Home Trade
e. Teak Plantation
f. EMU Mania
g. Scams of Real Estate
h. ….And some more jaw dropping scams
Causes of Asset Bubbles and Scams
10. The Power of Greed
11. The Power of Envy
12. The Power of Patterns
Identifying a Bubble or a Scam, and Avoiding it
13. Avoiding the Scams
14. Avoiding the Asset Bubbles
15. Some Strange but Worthy Indicators of Gauging a Bubble
a. Industry becomes the first choice for career seekers.
b. Bigger and taller skyscrapers.
c. Art sales are frontpage news.
d. Industry-related magazines are flying off the shelf.
e. The difference between long-term and short-term fades.
f. Everyone around you will be an expert.
g. Financial engineering hits the roof .
h. Investments are out, casinos are in.
About the Author
Sameer Rastogi’s total work experience now spans 19 years. He started his career with the Centre for Monitoring Indian Economy (CMIE) where he contributed to the Monthly Economic Service journal.
He was responsible for Research on Macro Economic Data as was made available from various government sources.
He has also delivered lectures on Financial Management to business management students as guest faculty. Till date, he has delivered over 200 hours of lectures at ICFAI and IBS campuses in Gurgaon.
He has written over 25 newspaper columns on issues concerning investments. These articles have been published in the Times of India and Metro Now.
Since 2005, he has been advising clients on Investments, Taxes and other related issues under the banner of Saksham Wealth Solutions P. Limited. The company is self-funded and is jointly held by him and his wife, Sonika Rastogi.