> Does anyone who understands finance have any insight on why this pattern seems so predictable? I would look to psychology in addition to economics. There are

> Does anyone who understands finance have any insight on why this pattern seems so predictable? I would look to psychology in addition to economics. There are several well-known psychological factors that suggest there will always be a boom/bust cycle: 1. People copy other people. Fear and greed are infectious. People become envious when their neighbour or brother-in-law continue to make quick profits from investments. 2. People make irrational judgements when affected by emotions like fear and stress. 3. People tend to make overoptimistic judgements about future events and their own business acumen. Conversely people often deny reality and do not critically assess their past performance. 4. In judging the future, people place too great emphasis on recent experience and discount events which occurred before they were born.