Bubbles Listed and Discussed
Dot Com Y2K Bubble
Real Estate Bubble
Monoline Insurance Focus Bubble
Gold Bubble
General Bubbles
European Bubble
To make money, we can look for errors in human thinking and then discipline our minds to avoid common
pitfalls. If there is an extraordinary popular delusion, we may choose to identify it early and get “on board
the train as it leaves the station.” We can watch all of the penguins line up at the edge of the water and then
bet furiously that they will all start to jump in after the first one does. But, then we want to get out of such
markets before they come crashing down.
On the crash side, we want to identify those commodities which have come down in price too far due to
panic selling.
We notice that the usual way in which people think about things is that their emotions make a decision and
their intellect is used to rationalize what their emotions want to believe. This is identified as ego control
mode.
We also notice that there is a “positive bias” in the sense that there are more newsletters telling subscribers
to buy than to sell. As a result, a human whose emotions told him to buy real estate was likely to have that
emotion reinforced by the run-up in values that occurred in the early 2000s. Popular books on Real Estate
told them to buy. This left the average human and human government officials ill-prepared for the real
estate bubble bursting. Those who predicted it were often looked upon as ‘out of touch’ and are not usually
called upon to join government and ‘fix things’. More typically the Barney Franks who caused the problem
will still be in charge and assign themselves the job of ‘fixing things’.
While this sad state of affairs may seem depressing, it is also an opportunity to make money. Every time
someone else does the wrong thing, it creates an opportunity for us to ‘do the right thing’.
So, let’s make a list of items such as fertilizer, gold, real estate, smart phones etc. and ask ourselves which
are to be bought and which are to be sold. We can also stand back and be neutral on some.
investabot
Dot Com Y2K Bubble
Real Estate Bubble
Monoline Insurance Focus Bubble
Gold Bubble
General Bubbles
European Bubble
To make money, we can look for errors in human thinking and then discipline our minds to avoid common
pitfalls. If there is an extraordinary popular delusion, we may choose to identify it early and get “on board
the train as it leaves the station.” We can watch all of the penguins line up at the edge of the water and then
bet furiously that they will all start to jump in after the first one does. But, then we want to get out of such
markets before they come crashing down.
On the crash side, we want to identify those commodities which have come down in price too far due to
panic selling.
We notice that the usual way in which people think about things is that their emotions make a decision and
their intellect is used to rationalize what their emotions want to believe. This is identified as ego control
mode.
We also notice that there is a “positive bias” in the sense that there are more newsletters telling subscribers
to buy than to sell. As a result, a human whose emotions told him to buy real estate was likely to have that
emotion reinforced by the run-up in values that occurred in the early 2000s. Popular books on Real Estate
told them to buy. This left the average human and human government officials ill-prepared for the real
estate bubble bursting. Those who predicted it were often looked upon as ‘out of touch’ and are not usually
called upon to join government and ‘fix things’. More typically the Barney Franks who caused the problem
will still be in charge and assign themselves the job of ‘fixing things’.
While this sad state of affairs may seem depressing, it is also an opportunity to make money. Every time
someone else does the wrong thing, it creates an opportunity for us to ‘do the right thing’.
So, let’s make a list of items such as fertilizer, gold, real estate, smart phones etc. and ask ourselves which
are to be bought and which are to be sold. We can also stand back and be neutral on some.
investabot
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