Irrational exuberance is the psychological basis of a speculative bubble. I define a speculative bubble as a situation in which news of price increases spurs investor enthusiasm, which spreads by psychological contagion from person to person, and, in the process, amplifies stories that might justify the price increase and brings in a larger and larger class of investors, who, despite doubts about the real value of the investment, are drawn to it partly through envy of others’ successes and partly through a gambler’s excitement (p. 2).
2005年版(最新是2015年第三版)也有討論當時美國的房屋泡沫，提到為何許多人相信房地產是好投資，原因之一是個人不會頻繁買賣房屋︰
Why then do so many people have the impression that home prices have done so well? I think that, since homes are relatively infrequent purchases, people still remember the prior purchase price of a home from long ago and are surprised at the difference between then (when prices, including consumer prices in general, were lower) and now (p. 20).
此外擁有房屋亦有免稅與moral hazard 的考慮，因為租客沒有責任保養房屋，業主需要提高租金以作保養，令租金水平比純粹住屋的價錢更高，業主也會禁止租客在租屋內某些行為。
談及股市，作者列出12項1989-2000年美國股市持續上升的起因︰
- The Arrival of the Internet at a Time of Solid Earnings Growth
- Triumphalism and the Decline of Foreign Economic Rivals
- Cultural and Political Changes Favoring Business Success
- A Republican Congress and Capital Gains Tax Cuts
- The Baby Boom and Its Perceived Effects on the Markets
- An Expansion in Media Reporting of Business News
- Analysts’ Increasingly Optimistic Forecasts
- The Expansion of Defined Contribution Pension Plans
- The Growth of Mutual Funds
- The Decline of Inflation and the Effects of Money Illusion
- Expansion of the Volume of Trade: Discount Brokers, Day Traders, and Twenty-Four-Hour Trading
- The Rise of Gambling Opportunities
這些起因需要透過擴大機制來製造非理性榮景，擴大機制是指價格變動改變價格預期，從而令價格進一步變動的反饋循環，作者形容為類似自行發生的老鼠會︰
The amplification mechanisms work through a sort of feedback loop; later in this chapter, they will also be described as a type of naturally occurring Ponzi process. Investors, their confidence and expectations buoyed by past price increases, bid up speculative prices further, thereby enticing more investors to do the same, so that the cycle repeats again and again, resulting in an amplified response to the original precipitating factors (p. 60).
When prices go up a number of times, investors are rewarded sequentially by price movements in these markets, just as they are in Ponzi schemes. There are still many people (indeed, the stock brokerage and mutual fund industries as a whole) who benefit from telling stories that suggest that the market will go up further. There is no reason for these stories to be fraudulent; they need only emphasize the positive news and give less emphasis to the negative. The path of a naturally occurring Ponzi scheme—if we may call speculative bubbles that—will be more irregular and less dramatic, since there is no direct manipulation, but the path may sometimes resemble that of a Ponzi scheme when it is supported by naturally occurring stories (p. 78).
其內容包括過度自信、將投資描述為道德行為、過高預期、後悔失去獲利機會與網上交易令交易更為頻繁、價格變化令投資文化改變等。
財經新聞日趨普及亦是非理性榮景的重要推動因素，各種新聞可以引起公眾突然極為關注某些已知事實，作者稱之為注意力匯流(attention cascades)︰
The role of news events in affecting the market seems often to be delayed, and to have the effect of setting in motion a sequence of public attentions. These attentions may be to images or stories, or to facts that may already have been well known. The facts may previously have been ignored or judged inconsequential, but they can attain newfound prominence in the wake of breaking news. These sequences of attention may be called cascades as one focus of attention leads to attention to another, and then another (pp. 91-92).
全球媒體興起亦多少解釋為何各國基本經濟環境頗有差異，全球股市卻不時朝單一方向改變。
作者也提到非理性榮景總是伴隨著新時代的說法流行，公眾關注的不是長遠經濟預測，而是未來科技會是怎樣的詳細描述︰
It appears that most people are not interested in long-run economic growth forecasts for the aggregate economy. Economic theory would suggest that they should be interested, if they are behaving rationally. But in fact the topic is too abstract, boring, or technical. The public is interested in expansive descriptions of future technology—for example, in what amazing new capabilities computers will soon have—not in gauging the level of U.S. corporate earnings in coming years (p. 108).
新時代泡沫爆破也不是一朝一夕完成︰
Despite the suggestion inherent in the phrase speculative bubble that there may be a dramatic burst—a stock market crash—speculative bubbles and their associated new era thinking do not end definitively with a sudden, final crash. On reflection, this is not surprising, given that speculative prices are essentially formed in the minds of the millions of investors who buy and sell, and it is unlikely that so many people would simultaneously arrive at sudden and enduring changes in their long-run perceptions (p. 125).
作者也論及投資者的心理因素會影響其行為，例如定錨，投資者會以其他企業股票變動為定錨點，判斷投資的股票價格變動；也會以現時生活水平對比股票獲利是否過多。人們對自己判斷有多大信心往往只著重最後一步，忽視之前的推論步驟也有可能出錯；只比較已知觀察，忽略許多其他可能的事例；事後孔明偏誤令人們以為自己比實際認識更多；以直覺與感受決定投資；以為未來會跟隨過去的模式與趨勢；這都會令投資者過度自信。
定錨點如何改變也頗為不可理喻︰
For this reason, the effects of news stories on the stock market sometimes have more to do with discovery of how we feel about the news than with any logical reaction to the news. We can make decisions then that would have been impossible before the news was known. It is partly for this reason that the breaking off of a psychological anchor can be so unpredictable: people discover things about themselves, about their own emotions and inclinations, only after price changes occur (p. 156).
作者也認為投資市場價格並非整合所有投資者的獨立判斷，投資者大多選擇隨波逐流︰
the popular notion that the level of market prices is the outcome of a sort of vote by all investors about the true value of the market is just plain wrong. Hardly anyone is really voting. Instead people are rationally choosing not to, as they see it, waste their time and effort in exercising their judgment about the market, and thus choosing not to exert any independent impact on the market. Ultimately, all such information cascade theories are theories of the failure of information about true fundamental value to be disseminated and evaluated (p. 160).
人們偏好口耳相傳的消息亦令動聽故事影響市場︰
The word-of-mouth transmission of ideas does not have to infect the entire nation to affect national prices in the stock market or the market for homes. Moreover, word of mouth may function to amplify public reaction to news events or to media accounts of such events. It is still necessary to consider the infection rate relative to the removal rate in order to understand the public impact of any new idea or concept, since most people’s awareness of any of these is still socially mediated. Thus, the likelihood of any event affecting market prices is enhanced if there is a good, vivid, tellablestory about the event (pp. 166-167).
抱有互相衝突的見解時，人們也會假想現實或想像中的專家已經解決矛盾︰
Given this tendency to attribute views to real or imagined experts, people do not worry much about apparent contradictions among the views they hold. There is a willingness to free-ride here—to suppose that the experts have thought through the apparent contradictions and therefore to assume that the experts know why they are not in fact contradictions at all. It is certainly true that sometimes theories that appear to be contradictory really are not. And from there it is but a short step to the supposition that the experts could explain away most apparent contradictions—if one asked (p. 169).
效率市場假說指所有已知影響價格的因素已反映在價格中，任何未來價格變動都是由未知因素引起，故此市場走向無法預測，亦沒有人可以長期跑贏大市。作者駁斥這種說法，認為效率市場假說聲稱不應存在的定價錯誤(mispricing)確實存在於市場。即使可以預估市場未來長期走勢，也無法得知價格變動的確實時間、年期與幅度，以此獲利令定價錯誤回復正常。此外在實際市場中賣空往往受到限制，借股並不容易，也受到利息與法規限制。假如市場如效率市場假說所指缺乏獲利機會，那麼smart money相比不那麼smart的也沒有優勢，無法在市場上消除定價錯誤。
效率市場假說認為價格反映基本因素的說法也並不恰當，價格變動並不總是與利潤及紅利相關，也並不總是與未來利潤及未來紅利相關。從美國股市的歷史來看，價格變動幅度也遠比利潤及紅利變動幅度高。
另一種解釋股市新高的說法是，公眾學會以前不知道的事實，令他們更著重於投資股市。然而公眾據指學到股市在下跌後必定回復、股票表現必然較其他投資優秀、共同基金表現超越個別投資者，這三項「事實」都並不正確。公眾並沒有新近學會甚麼，而股市回軟後這些「事實」也為人忘記。
作者總結指，或許人們判斷個別股票或房屋價格是否合理有一定見地，但判斷整體價格時只是依靠模糊印象︰
In both the stock market and the housing market, people have only the fuzziest idea what these investments are really worth, what their prices ought to be. They may be able to judge whether one stock is overpriced relative to another, or whether one house is overpriced relative to another, but they just do not know how to judge the overall level of prices. Much more salient in their minds is the rate of increase of the prices, something that they talk and hear about a lot in a time of rapid price change, and that has subtle effects on their demand for speculative assets (p. 208).
股票與房屋價格下跌不只是個別人士損失，也是影響廣泛的財富重分配過程︰
One could say that a further fall in the stock market or the housing market would really be harmless, since nothing is physically destroyed by a fall in market values; it is only a change on paper and in our minds. One could say that if the stock market were to fall by half again it would only bring us back to where we were a decade ago in terms of market values. But there is the problem that the loss will not be borne equally. Some who rode the market up to new prosperity will have lightened up on their stock holdings and will keep their gains; others will have recently entered the market and will take only the losses. Similarly, a loss of value in housing markets will not be borne at all equally, given our very different exposure to these markets. Thus a substantial fall in the markets would leave some people really poor while leaving others very rich (p. 216).
面對非理性榮景，作者的建議包括分散投資，不只著重股票；增加儲蓄；各種退休計劃應考慮泡沫的影響，減少投資股市，最理想是建立按通脹調整的基金；社會保障計劃不應投資於股市，應視為風險分散機制；財政政策不應試圖令泡沫爆破，尤其利息政策會影響整個經濟，不應急速緊縮；定價錯誤出現時知名人士應提醒公眾；股市應向各國投資者開放，鼓勵投資者注意基本因素，並令個人更易從股市中離場；公眾人物應向大眾強調對沖風險的重要。
