Consider the following statement: "If there is another crash similar to that of October 19th, 1987, the market will surely be back up to its former levels in a couple of years or so. Agree or disagree?

If you strongly agree or agree somewhat, you are in good company. You are in accord with 91 per cent of the wealthy individual investors surveyed by Yale economist Mr Robert Shiller for his new book. But what on earth gave you and them that idea?

The market crashed in 1929, as we all know, but it did not return to its pre-crash levels for 29 years. The notion of a market that always "goes back up" before we need the money is folklore.

Mr Shiller's book Irrational Exuberance is the most talked-about finance book of the year. He argues that we are in a speculative bubble, "a situation in which temporarily high prices are sustained largely by investors' enthusiasm rather than by consistent estimation of real value".

The data he marshals show that, starting in the mid-1980s, growth in stock prices took leave of earnings growth rudely and sharply.

By the beginning of 2000, the gap between the two had become a chasm. His focus is the investor psychology that is sustaining the bubble. He attacks the collective rationales of US investors for pouring money into the market despite high prices.

Irrational Exuberance is not billed as a personal-finance book but it essentially is. This is not a conventional "how-to" book. Mr Shiller offers a number of recommendations for public and private financial policymakers, and a few for investors.