Speculative Contagion

Martin runs Martin Capital Management in Indiana, and the book collects material from his annual reports written between roughly 1998 and 2005, in which he documented the technology bubble as it inflated and then deflated. The reference has not verified the detail of this book, and what follows rests on its structure and its author's stated position rather than on a close reading.

The format matters more than any individual argument. Because the material was written contemporaneously and published to clients, it constitutes a dated record of what an investor said before outcomes were known, which is the only form of evidence that can test a forecasting record. Martin's position was consistently cautious about valuations during the period, and the reports document the cost of holding that position while the market rose.

The recurring themes, so far as the reference has established them, concern the difference between price and value, the behaviour of investors during a period when caution produces underperformance, and the pressure a manager faces from clients when a defensive position looks wrong for several years in succession.

Because the book is a compilation of client letters rather than a constructed argument, it does not present a method. Its interest is documentary. Readers wanting a general treatment of bubbles have better options in Kindleberger, Chancellor and Galbraith, and readers wanting a contemporaneous record of one manager's reasoning through a specific episode will find that here.