Whereas the prices of individual company stocks respond rationally to unexpected news, movements in the market as a whole often do not behave in the same way. Indeed, they frequently appear perverse. Prices peak when economic news is bad; they respond only to good news when they are rising, or only to bad when they are weak: they overshoot, and then correct violently.

Drawing on his hands-on experience, Professor Pepper puts forward the theory that the market is responding to the balance between savings seeking investment and borrowers' need for finance, and not to events. Money sets the mood: the market behaves like a fickle crowd, which can be followed with profit. In challenging conventional theory, this book increases our understanding of financial markets; it is essential reading for economists and practitioners alike.