When markets lose the plot: Professor Alex Edmans launches The Madness of Markets

Against a backdrop of a sharp sell-off in AI stocks, 150 guests gathered at London Business School on 16 September for the launch of Professor of Finance Alex Edmans latest book, The Madness of Markets.

Published by Penguin Life, the book explores why markets behave irrationally, examining how narratives, emotions and social contagion can influence even seasoned retail and institutional investors. Professor Edmans delves into the psychology behind market swings, drawing on compelling real-world examples to show how investors can recognise when the crowd has lost the plot.

Rather than simply identifying common investment mistakes, The Madness of Markets examines how irrational behaviour can create opportunities for those able to remain disciplined and think independently. It offers practical insights into avoiding costly decisions, interpreting market signals, and making informed investment choices.

The event opened with an address from LBS Dean, Sergei Guriev, who described Professor Edmans as “one of the global stars in finance, and an amazing teacher”. This was followed by an engaging presentation from Edmans, who explored the forces driving financial markets and why seemingly small shifts in sentiment can send stock prices tumbling and reverberate across the financial system. Describing The Madness of Markets as “the work I’m most proud of in my career”, Edmans offered a lively insight into the research and thinking behind the book.

A thought-provoking fireside conversation with Bloomberg’s UK Money Editor, Merryn Somerset Webb followed, exploring the forces shaping financial markets and the psychology behind investor behaviour. The event concluded with a lively Q&A, before guests gathered to network and continue the conversation over drinks.

Professor Alex Edmans, London Business School said: “Financial markets are shaped by humans and humans make mistakes. Understanding the psychology behind market movements is as important as understanding the numbers. The Madness of Markets draws on years of research into how investors overreact to irrelevant information, underreact to important information and sometimes misreact in the wrong direction entirely. I wanted to bring these insights together, at a time when technology has put a wealth of information and the power to act on it instantly in everyone’s pocket”.

The Madness of Markets - Accolades:

"This book serves two purposes: it is an INCREDIBLY USEFUL AND ENTERTAINING handbook, but it is also a warning. Numbers often lie — in large part perhaps we prefer it that way.” Rory Sutherland, Vice Chairman of Ogilvy

“At a time when markets often seem to be going mad, amid wild AI hype, Edmans’ book offers a cool-headed compass that enables you to navigate the world of finance and - most importantly - your own emotions. Punchy, witty and provocative, this enables anyone to work out whether they are over or under-reacting to events and chart a more level-headed approach to reading market signals.” Gillian Tett, Financial Times columnist

Alex Edmans is one of the world’s leading professors in finance and was recently appointed President of the Western Finance Association for 2026-27. He is also the author of May Contain Lies, an Amazon number one bestseller and Grow the Pie, a Financial Times Book of the Year. He has spoken at Davos, testified before the UK House of Commons and reached millions through his TED talks.

For more information on The Madness of Markets, please visit: Here