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The Madness of Markets

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The Madness of Markets

By: Alex Edmans
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About this listen

A groundbreaking look at the hidden psychological forces that push even the smartest investors to make irrational choices and a practical roadmap for profiting when the market loses its mind—from one of the world’s leading finance professors

Why did Isaac Newton lose a fortune in the South Sea Bubble? Why did people spend millions on cartoon apes during the NFT frenzy? Why does the stock market fall when a national soccer team loses, or rise on a sunny day?

In this witty, eye-opening, and deeply reported book, Professor Alex Edmans, a professor at the London Business School specializing in behavior finance, reveals the hidden psychological forces that push markets away from logic—and create opportunities for those who can stay sane while others panic. Drawing on cutting-edge studies and his more than 20 years at the intersection of academia and Wall Street, Edmans explains why investors chronically overreact, underreact, and misreact to market forces—and how these mistakes can lead to bubbles, crashes, hype cycles, bad corporate decisions, and outsized losses.

But The Madness of Markets is not just about spotting irrationality in the market—it’s about outsmarting it. Edmans shows you how to think sharper, invest smarter, dodge predictable traps, and recognize when the crowd has completely lost the plot. Playfully rigorous and packed with unforgettable stories—from Reddit frenzies, to CEO ego trips, to Premier League football upsets—The Madness of Markets offers an accessible yet thorough guide to anyone looking to make smarter decisions in a noisy financial world.

This book isn’t only for professional investors. It’s for anyone who has a pension, an IRA, or any long-term stake in the market—whether you’re chasing crypto highs or simply protecting your retirement while the world loses its mind.
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