1/9/2024 0 Comments Market euphoria meaningA few participants sense doom, so they pull out rapidly at a profit. When the fall occurs, it will be disastrous. It's inherently built into the situation. But without fail, the fall will always happen. Speculation participants typically have one of two common attributes: (1) some believe the new price-enhancing mechanism will go on forever, or (2) others, who are more astute, know they are in a speculative game and believe they will know when to "cash out" at a profit before the inevitable collapse. The speculation, building on itself, provides its own momentum.More buyers exert more upward pressure on the price.The increased price attracts more buyers.The price of the objects tomorrow will be higher than the price today. The objects can be anything….tulips, land, art, stocks, bonds, housing, etc.The price of the objects of speculation goes up.Hopefully by the end of this article, doubters will be convinced of Galbraith's conclusion.Īmong the common attributes of financial euphoria are these factors: The common attributes of speculative behavior make future episodes a virtual certainty. All of these episodes have recognizable common attributes, despite differences in the type of assets at the center of speculation. Common Aspects of the Nature of Financial Euphoria Episodesįree enterprise economies have always had recurring episodes of speculative behavior (large swing boom-bust cycles with bubbles that collapse).
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