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It's not really a result of anyone being fooled. It's rational economic behavior to get in on a bubble which is why bubbles get bigger. The people that get scr

• danenania 16y ago
  Unless you are a very sophisticated trader (and likely even then), knowingly betting that a bubble will continue to expand is just gambling. You might get lucky and exit at the right time, but it's seriously -EV. That said, I don't really think the majority of small time investors think in those terms or are at all aware of how the monetary boom-bust cycle operates, which is why they get fooled into thinking they are better off when their nominal wealth increases as their real wealth deterioriates.
  • okaramian 16y ago
    In hindsight, maybe. You only know it's a bubble when it bursts and the markets come back to earth. Outside of that it's rational to invest in something that's growing.
    • danenania 16y ago
      I still disagree. During bubbles, it is often apparent through straightforward financial analysis that companies are overpriced. Investing in a company whose price isn't supported by underlying assets and earnings because it's 'hot' is a speculative gamble on the extremely difficult to predict group psychological whims of the marketplace, not a rationally conceived value investment.