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Tulips, Popular Prophets, and Beanie Babies

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Published : April 07th, 2021
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Category : GoldWire
“The essence of a speculative bubble is a sort of feedback, from price increases, to increased investor enthusiasm, to increased demand, and hence further price increases.  Major speculative bubbles, as I argued in Irrational Exuberance, are always supported by some superficially-plausible popular theory that justifies them, and that is widely viewed as having sanction from some authority figures.  These may be called new-era theories.”

Robert Shiller 

"The term mania describes the frenzied pattern of purchases, often an increase in prices accompanied by an increase in trading volumes; individuals are eager to buy before the prices increase further. The term bubble suggests that when the prices stop increasing, they are likely – indeed almst certain – to decline.” 

Charles Kindleberger 

“In reading The History of Nations, we find that, like individuals, they have their whims and their peculiarities, their seasons of excitement and recklessness, when they care not what they do.  We find that whole communities suddenly fix their minds upon one object and go mad in its pursuit; that millions of people become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly more captivating than the first.” 

Charles MacKay

Foolishness is always popular, but it seems especially so among a surprisingly large minority of the people these days.

The more foolish the subject or theory, the louder and more aggressive the followers of a delusion seem to speak.

For many, continuing the delusion seems much more attractive than the alternative, which is to admit  their foolishness, which they cling to proudly. 

Pride indeed goes before a fall.   

And it often blindly follows a more cynical and self-deluded fool into the abyss.

Stocks backed off their highs a bit today.

Gold and silver continued to advance to overhead resistance and to what could be the top of a short term trading range.

Let's see if they can break out, or if this will continue on a bit longer.

Have a pleasant evening.


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