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We are in a cycle and moving toward the closing stages of the cycle.
History does repeat itself.
And, investors must learn from earlier examples.
Andy Kessler, writing in the Wall Street Journal attempts to address this problem.
Mr. Kessler refers to our current situation as being in “A Market Hype Cycle.”
Mr. Kessler gives several examples of earlier “Hype” cycles with reference to specific situations and specific organizations.
He writes about when “everyone got too excited about future possibilities, deep into the hype cycle of new technology.”
“That’s when,” he continues, “the toxic cocktail of greed, stupidity and hubris takes over.”
Asset Bubbles
I have been writing about “asset bubbles,” situations where asset prices rise for no particular reason directly connected with the asset, but, in the early stages, sustain increasing price levels that draw many new investors into the market place.
Of course, just as rising cycles turn into falling cycles, asset bubbles “pop” and move in the opposite direction.
My particular story is that in the current case the Federal Reserve moved to protect the U.S. economy by flooding the market place with lots and lots of liquidity, in the trillions of dollars, hoping to keep the U.S. economy from tumbling into a vast financial market collapse and an economic disaster.
In this battle, the Federal Reserve won and the “collapse” and the “disaster” did not occur.
But, asset prices went through the…
