Bull! A History of the Boom, 1982-1999

Mahar, a financial journalist, wrote a history of the American bull market from its August 1982 beginning to the peak, working from contemporaneous sources and from interviews.

The narrative traces the changes that produced the market and the beliefs that sustained it. She covers the shift from defined benefit to defined contribution retirement plans, which put tens of millions of people into equities through payroll deduction and created a continuous flow of buying that was insensitive to price. She covers the growth of mutual funds and the marketing that accompanied it, the emergence of financial media as entertainment, the analysts whose compensation depended on investment banking, and the arrival of discount brokerage and then online trading.

The intellectual history is the more interesting part. Mahar traces the beliefs that became consensus: that stocks always outperform over the long run and therefore that time removes risk, which she shows rests on a misreading of the historical record; that price to earnings ratios could permanently reoccupy a higher range because of low inflation and improved productivity; that a new economy had changed the rules; and that any decline was a buying opportunity. She documents the small number of professionals who dissented and what happened to their careers and their assets under management.

Her general argument is that the bull market changed the way Americans understood investing, converting it from something done by professionals for the wealthy into a mass activity, and that the beliefs required to sustain participation were manufactured rather than discovered.

The book was published in 2003 after the collapse and is written with the outcome known, which shapes the selection. It is a history rather than an analysis and does not engage with the finance literature on valuation. The account of how professional dissent was punished by client withdrawals is the most useful part for practitioners.