Famous Financial Fiascos

Train, an investment manager and writer, collects short accounts of financial manias, frauds and disasters across several centuries: the tulip mania, the South Sea Bubble, John Law's Mississippi scheme, various American promotions, the Hunt brothers' attempt to corner silver, and assorted swindles and inventions that attracted capital.

The episodes are told briefly, often in a few pages each, with an emphasis on the absurd detail. Train's recurring observations are that manias require a plausible story about a genuinely new thing, that the promoters are frequently believers rather than cynics, that the last stage of a mania draws in people who have no knowledge of the subject at all, and that the same structures recur across centuries with different assets.

The book is entertaining rather than analytical, and its use is as a compact reference of cases rather than as a framework. Train does not attempt the economic history that Kindleberger or Chancellor provide, and readers wanting an explanation of why manias occur should go to those. The reference has not verified the specific factual details of the shorter episodes, several of which come from secondary popular sources and some of which, notably the tulip mania, have been substantially revised by subsequent scholarship. Read it for the range of cases and the pattern recognition, not as history.

American investment adviser who founded Train, Smith Counsel and wrote profiles of the era's leading money managers.

The Money Masters profiled Buffett, Graham, Templeton and Price while several were still working, setting out each manager's method in a few pages and establishing the format every later investor-profile book uses. Famous Financial Fiascos covers the reverse case, running through manias and frauds from the tulip trade onward.

Train, Smith Counsel