Daily Traders Edge

Why Financial Manias Persist

September 13
09:13 2021

Calling the stock market a bubble has become something of a sport for pundits and investors alike ever since the Great Financial Crisis ended:

April 13, 2021: A growing number of investors believe the stock market is in a bubble (Business Insider)

October 29, 2020: A stock market bubble is forming (Morningstar)

June 25, 2019: 7 ways that 2019 mirrors the dot-com bubble (Investopedia)

September 5, 2018: Disaster is inevitable when America’s stock market bubble bursts (Forbes)

August 9, 2017: Is the stock market a bubble? (USA Today)

June 23, 2016: Uh-oh. Is the stock market in a bubble again? (CNN Money)

September 13, 2015: Fears grow over US stock market bubble (Financial Times)

May 6, 2014: Time to worry about stock market bubbles (New York Times)

December 2, 2013: Nobel prize winner warns of US stock market bubble (CNBC)

March 27, 2012: Robert Shiller eyes another tech bubble (Yahoo! Finance)

May 3, 2011: Why this stock market looks like the tech bubble of 2000 all over again (Business Insider)

January 11, 2010: US stocks surge back towards bubble territory (Business Insider)

We’re on year 12 of bubble predictions.

The thing is actual stock market bubbles are relatively rare.

You have historical bubbles like the South Sea Company, Mississippi Company and Railroad bubble that took place in 18th and 19th centuries.

The 1920s run-up to the Great Depression was a massive bubble. Japan in the 1980s is arguably the greatest financial asset bubble in history. The dot-com bubble of the late-1990s is up there as well. The real estate madness of the aughts morphed into a full-fledged global credit bubble.

While relatively rare, it would be foolish to assume manias can ever be eradicated. Unless our hard-wiring somehow changes, they’re here to stay.

It’s in our nature. We humans have a tendency to go overboard and take things to extremes. We can’t help ourselves, especially when it comes to new and exciting technologies or financial securities.

Continue Reading at A Wealth of Common Sense

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