The Equity Culture: The Story of the Global Stock Market
by B. Mark Smith
Publisher: Farrar Straus & Giroux; 1st edition, Hardcover (August 2003)

book reviewed by Kevin Quinn

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 Sachs is also the author of Toward Rational Exuberance: the Evolution of the Modern Stock Market (2001).

In The Equity Culture, Smith traces the global stock market from its origins in ancient Rome to the present day. The bulk of his attention focuses on equity market activity from the Mississippi Company in the18th Century to today's technology driven markets, with trading driven by academic-based and sophisticated computer models. 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, is 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!

Kevin Quinn is a principal with the law firm of Hinman Straub P.C.

*******

10/27/2003