Key Takeaways
- • Alex Edmans, professor of finance at London Business School, released a new book in September 2026 titled *The Madness of Markets: Why Smart Investors Make Crazy Decisions and How to Exploit Them*, which explores market psychology and investor behavior.
- • Edmans emphasizes the importance of avoiding participation in market bubbles and delusions rather than attempting to time market peaks, citing the electric vehicle sector's downturn in 2022–2023 as a cautionary example.
- • The discussion centers on understanding how psychological biases and market delusions influence investment decisions, even among sophisticated investors, and how preparedness for unpredictable market conditions trumps predictive ability.
- • Edmans has established credibility as a researcher through publications in major financial media outlets including the Financial Times and Wall Street Journal, and is the author of two prior bestselling works: *May Contain Lies* (Amazon number one bestseller) and *Grow the Pie* (Financial Times book of the year).
Summary
Alex Edmans, a professor of finance at London Business School and recognized expert on market psychology, was featured in a recent episode of *Top Traders Unplugged* to discuss his newly published book, *The Madness of Markets: Why Smart Investors Make Crazy Decisions and How to Exploit Them*, released in September 2026.
The conversation centers on a core thesis: successful investing relies not on predicting future market movements but on preparing for unpredictable scenarios. Edmans articulates a nuanced approach to bubble avoidance, arguing that investors should prioritize protecting themselves against severe market downturns caused by widespread delusions rather than attempting to exit positions at precisely the optimal moment. He illustrates this principle using the electric vehicle sector, which experienced significant depreciation in 2022–2023 after elevated investor enthusiasm, demonstrating the risks of participating in market manias regardless of near-term gains forgone.
Edmans brings substantial academic and commercial credentials to the discussion. His research has been featured prominently in leading financial publications including the Financial Times and Wall Street Journal. His prior works—*May Contain Lies* and *Grow the Pie*—achieved significant commercial success, with the former reaching Amazon's number one bestseller ranking and the latter recognized as a Financial Times book of the year. The new book extends his exploration of behavioral finance and market psychology, addressing how even sophisticated investors fall prey to systematic decision-making errors driven by cognitive biases and herd behavior.
The conversation centers on a core thesis: successful investing relies not on predicting future market movements but on preparing for unpredictable scenarios. Edmans articulates a nuanced approach to bubble avoidance, arguing that investors should prioritize protecting themselves against severe market downturns caused by widespread delusions rather than attempting to exit positions at precisely the optimal moment. He illustrates this principle using the electric vehicle sector, which experienced significant depreciation in 2022–2023 after elevated investor enthusiasm, demonstrating the risks of participating in market manias regardless of near-term gains forgone.
Edmans brings substantial academic and commercial credentials to the discussion. His research has been featured prominently in leading financial publications including the Financial Times and Wall Street Journal. His prior works—*May Contain Lies* and *Grow the Pie*—achieved significant commercial success, with the former reaching Amazon's number one bestseller ranking and the latter recognized as a Financial Times book of the year. The new book extends his exploration of behavioral finance and market psychology, addressing how even sophisticated investors fall prey to systematic decision-making errors driven by cognitive biases and herd behavior.
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