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> If majority of market participants were value investors you simply would not have bubbles to the degree that we have seen historically. There is an argument
by RickHull 15y ago
> If majority of market participants were value investors you simply would not have bubbles to the degree that we have seen historically.
There is an argument that bubbles are the result of overexpansion of credit. Granting systematic credit is the basic function of central banks.
- hugh3 15y agoNot really. Bubbles can easily occur in the absence of credit. I'm not sure how many people were borrowing money in the south seas or tulip bubbles, but probably not that many. Even in the first dot-com bubble (how quaint it sounds to say it now) most of the investing was being done by folks who had money rather than folks who were borrowing it. The recent housing bubble, on the other hand, yes.
- ArturSoler 15y agoThere was a monetary expansion during the tulip bubble (basically New World's gold + laws that made convenient routing that gold to the Netherlands).