Mr. Market Miscalculates: The Bubble Years and Beyond

by James Grant

Why is America in financial crisis today? This book, better than any to date, explains it all-how we got here and where we are going. The how we got here is brilliantly described in a collection of pieces from Grant's Interest Rate Observer, the Wall Street insider's Bible. The where we are going is treated in Jim Grant's up-to-the-minute introduction. No fan of Greenspan or Bernanke, Grant tells the unvarnished truth about America.

Genres: Finance, Economics, Business, Nonfiction, History

430 pages, Hardcover

First published November 7, 2008

About the author

There is more than one author by this name on Goodreads.

James Grant, financial journalist and historian, is the founder and editor of Grant’s Interest Rate Observer, a twice-monthly journal of the investment markets. His book, The Forgotten Depression, 1921: the Crash that Cured Itself, a history of America’s last governmentally unmedicated business-cycle downturn, won the 2015 Hayek Prize of the Manhattan Institute for Policy Research.

Among his other books on finance and financial history are Bernard M. Baruch: The Adventures of a Wall Street Legend (Simon & Schuster, 1983), Money of the Mind (Farrar, Straus & Giroux, 1992), Minding Mr. Market (Farrar, Straus, 1993), The Trouble with Prosperity (Times Books, 1996), and Mr. Market Miscalculates (Axios Press, 2008).

Reviews

[m · Rating 4 out of 5]

For nearly four decades James Grant has been publishing tightly argued heterodoxical commentary on modern finance for his bi-monthly newsletter, Grant's Interest Rate Observer.

Beginning in the summer of 2006 and spanning several months, skeptical (as always) of the high value accorded housing, he published four different analyses putting forth his case for why housing values would fall.

In one such report (Oct. 6, 2006) republished in Mr Market Miscalculates (pp. 180-183), Grant does not merely rehearse widely known stats indicating house price expensivity, he list a specific credit market derivative (then available only to professional "accredited" investors) that one could buy in order to profit on house price decline. Some of Grant's analyses at this time influenced two characters (Michael Burry & Steve Eisman) in Michael Lewis' The Big Short

In The Big Short Lewis writes:

In early 2007 Grant wrote a series of pieces suggesting that the rating agencies had abandoned their posts—that they were almost surely rating these CDOs without themselves knowing exactly what was inside them (p. 177).

In point of fact, Grant (and other analysts) had published his negative view of housing as early as August 2006. it's safe to say that many people (Grant's subscribers) were attuned to threats posed by the housing bubble much earlier than later accounts from Lewis and others would have the lay public believe.

It's often pejoratively said of critics like Grant that their predictions are wrong as often as they are correct, that they are like broken clocks—correct twice a day. But such snark misses the value of Grant's analytic skills and the pleasure to be had reading his prose, for even when Grant's predictions prove incorrect, the example of his methodological approach & his prose are instructive.

I read a lot of financial analyses. Afaik, Jim Grant & David Stockman are the two most interesting & insightful financial critics currently writing. I recommend reading everything they publish.

[Daniel · Rating 4 out of 5]

Unintentionally useful! A good shopping list of every conceivable bearish argument, for any possible investment circumstance. Read this book and you'll *always* know all the reasons to stay out of the stock market, no matter where we are in the market cycle.

[Stephen Hemingway · Rating 4 out of 5]

This is a selection of articles from the journal covering the period from (about) the end of the 90's to the Global Financial Crisis in 2008.

The articles are not arranged chronologically, but thematically.

It's interesting to read about this time. As you'd expect, Grant saw the crashes coming.
I felt it was worth reading now because (surely) at some point we're going to get the mother of all global financial crises. I guess the most valuable thing about reading the book was reading about how he was right, but years too early in some cases.

If you want to make money investing, you not only have to forecast moves accurately, you also have to forecast timings. And when markets move up the stairs and down the elevator, it's tricky to make money out of spotting on oncoming crisis. But you knew that already.

[Ryan · Rating 5 out of 5]

Mr. Market Miscalculates is a collections of essays sourced from Grants Interest Rate Observer from about the mid 90s up until 2008. Naturally, the timing covers the largest financial events that occurred during my lifetime: the dot com boom and the mortgage meltdown. Written in the heat of the moment, Mr. Market Miscalculates showcases what the financial industry was thinking before, during, and after these events.

Always true to form, Jim Grant is an entertaining read. A dry wit coupled with insightful commentary leaves some very memorable impressions on the reader. Notably, a healthy skepticism of the good times, wary of the risks that credit brings during the bad.

[Jagordo · Rating 5 out of 5]

Despite a name that feels like it's tactically poised to disinterest prospective readers, Grant's Interest Rate Observer is a wonderfully written publication and deserves every pricey subscription it attains. Fortunately for the less wealthy and/or the more penny-pinching of us who cannot put down $125/mo. for Grant's excellent commentary, Mr. Grant has collected this choice collection of his essays and bound them for our pleasure. Any student of finance/history will find joy in this book.

[Steve]

"Mr. Market Miscalculates" is a collection of articles from the last few years of Grant's Interest Rate Observer, which is edited by James Grant. Grant's is "is an independent, value-oriented and contrary-minded journal of the financial markets."

While each was interesting in its own right I had a hard time seeing how the different articles related to each other, or how they painted a bigger picture. Mostly they just showed that Grant's predicted some of the recent financial troubles and other bits of random commentary. Of course, the compilation didn't include the predictions which didn't pan out.

I made it about 2/3 of the way through.

[Sam · Rating 4 out of 5]

A gold-bug's view of the credit crisis, & more. A must-read for any investment or economics nerd, but probably too tough for most readers. Grant is agnostic about short- & middle-term movements in interest rates (hence the name of his publication: "Interest Rate OBSERVER" -- he observes rates; he doesn't predict them). So it's striking that Grant is confidently predicting a long-term rise in interest rates and inflation.

[Ben · Rating 5 out of 5]

James Grant is absolutly the best commentator on financial matters in the world and this book is one of his best and also so appropriate for the mortgage crisis. If you must read only one businesss book this year......

[Robert]

After reading this book I am a big James Grant fan. He gets it and he gets it early.

[Aharon · Rating 5 out of 5]

I know I am meant to say I have a "man-crush" on James Grant. But no, it is a flat-out, straight-up [sic:] crush.

[Byron Wright]

This book is definitely understandable and an interesting history of the last few years. However, it's still a bit dense and I found myself unmotivated to finish second half.

[Miguel · Rating 5 out of 5]

Concise, direct, and straight-to-the-point articles that summarize James Grant's contrarian and value-oriented thoughts on finance and markets.

[M.R. Raghu · Rating 3 out of 5]

Powerful writer. Highly insightful. Though I did not understand the arrangement of the book. It is a collection of all previous articles.