3 ms·

I like the article. It describes my observations from previous BTC bubbles. A point the author makes is that within a bubble, markets can turn irrational. And

I like the article. It describes my observations from previous BTC bubbles. A point the author makes is that within a bubble, markets can turn irrational. And additionally that they can sustain this irrationality for some time.

js8 6y ago
> And additionally that they can sustain this irrationality for some time. The market can remain irrational longer than you can remain solvent.
- marvin 6y ago
  I don't like this saying. People also say this about things they end up being wrong about, such as Tesla in 2013. Hell, given that economists predict 15 out of the last 3 recessions, people who say this are probably flat-out wrong more often than not. So unless the saying comes with the interpretation "the market can remain seemingly irrational long enough to be right", it just reduces to "I disagree with what the market is doing right now, maybe it's a bubble, who knows".
  - caddemon 6y ago
    I don't think the saying is really tied to any particular prediction. Surely there are times when you felt the market was behaving irrationally? The saying is a warning about taking action in such times. Because even if you are ultimately right, you may still end up a big loser. I.e. the whole point of the saying is that it's not just about whether there's actually a bubble or not. You're also taking risk with how high it will go/how long it will last before popping. So a consumer investor may just buy stocks they think will eventually go up, and won't encounter major problems with that, but shorting just because they think something will eventually go down is a whole different beast.
    - marvin 6y ago
      That's fair enough. Prefacing it, as "even if you're right, the market can remain irrational longer than you can remain solvent" gets that point across better; that there's a dual risk in betting on the downside scenario. When I hear people saying this, the subtext is usually that there is obviously an actual bubble that will pop someday. Rather than a warning, the statement is more of a joke about how stupid the market is.

js8 6y ago

> And additionally that they can sustain this irrationality for some time. The market can remain irrational longer than you can remain solvent.

marvin 6y ago
I don't like this saying. People also say this about things they end up being wrong about, such as Tesla in 2013. Hell, given that economists predict 15 out of the last 3 recessions, people who say this are probably flat-out wrong more often than not. So unless the saying comes with the interpretation "the market can remain seemingly irrational long enough to be right", it just reduces to "I disagree with what the market is doing right now, maybe it's a bubble, who knows".
- caddemon 6y ago
  I don't think the saying is really tied to any particular prediction. Surely there are times when you felt the market was behaving irrationally? The saying is a warning about taking action in such times. Because even if you are ultimately right, you may still end up a big loser. I.e. the whole point of the saying is that it's not just about whether there's actually a bubble or not. You're also taking risk with how high it will go/how long it will last before popping. So a consumer investor may just buy stocks they think will eventually go up, and won't encounter major problems with that, but shorting just because they think something will eventually go down is a whole different beast.
  - marvin 6y ago
    That's fair enough. Prefacing it, as "even if you're right, the market can remain irrational longer than you can remain solvent" gets that point across better; that there's a dual risk in betting on the downside scenario. When I hear people saying this, the subtext is usually that there is obviously an actual bubble that will pop someday. Rather than a warning, the statement is more of a joke about how stupid the market is.