Every bubble consists of a trend that can be observed in the real world and a misconception relating to that trend. The two elements interact with each other in a reflexive manner.
If we carry this line of argument to its logical conclusion, the meaning of life consists of the flaws in one’s conceptions and what one does about them. Life can be seen as a fertile fallacy.
If we care about universal principles such as freedom, democracy and the rule of law, we cannot leave them to the care of market forces; we must establish some other institutions to safeguard them.
I don’t panic. The same thing applies to me as to everybody else, so I’m given to euphoria and despair. And I would say that I basically have survived by recognizing my mistakes.
When a long-term trend loses it’s momentum, short-term volatility tends to rise. It is easy to see why that should be so: the trend-following crowd is disoriented.
No individual anonymous participant can influence the prices and therefore you really can speculate in the market without paying attention to morality. That’s one of the positive features of markets. That’s why they function.
