Mr. Market Miscalculates
James Grant
(Axios Press, $22)

Coming to your local bookstore this month is a volume that examines the causes of what many investors are now ruing as the American bubble era.

James Grant, renowned for Grant's Interest Rate Observer, demonstrates that although the credit bubble may have done more damage than the tech bubble of the 1990s, both stem from the same basic causes: a breakdown of rating standards and an abandonment of the principles of financial risk management.

This book treats a serious topic with humor, embodying investor confusion in the character of an imaginary investor, Mr. Market, who buys and sells shares with whimsical abandon. Financial scenarios are illustrated with catchy, on-point cartoons. Less than humorous, in the context of this fall's events, is Grant's point that much of the foreign investment in American markets is irrational, considering the cavalier attitude toward risk management that now seems commonplace.

Yet, given the recent downtrends in now-unstable global markets, such distinctions between investors are becoming disturbingly moot.