The Anatomy of a share market Bubble.
Campbell Gorrie, the market anaylst and Ord Minnett, contends that
investment booms, or bubbles, have characterisitcs that are repeated
through the generations.
"Bubbles emerge, he suggests, when there is an element of novelty about the
target sector and a belief by the individual investors that they mostly
understand the industry, if not completely. "They believe they have enough
knowledge in a general sense to indicate that it is a new, broad wave of
the future, a new industry, that is arising, that will bring boundless
wealth for decades to come," he said.
There must be "a sufficient lack of clarity" about the true financial
condition of the industries or companies involved, and perhaps vagueness
about the regulatory environment. And there must be some element of
"mystery" so that people suspend their belief in fundamentals for at least
a short period."
Even rational people who are well above the voting age will succumb to
mysteries," he said."