Your example is actually quite good: Are there people who think they are better informed than the chairman of the Federal Reserve? And to amplify: This was B

Your example is actually quite good: Are there people who think they are better informed than the chairman of the Federal Reserve? And to amplify: This was Ben Bernanke's assessment as late as March 28, 2007 > At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. http://www.federalreserve.gov/newsevents/testimony/bernanke20070328a.htm http://www.federalreserve.gov/newsevents/testimony/bernanke2... Bear Sterns went to firesale less than a year later. To actually make money off of the market situation then (both on the long and short side), you had to also recognize the Keynesian wisdom: Markets can remain irrational longer than you can remain solvent. I don't begrudge Sam for talking his book, but pretending to have knowledge about what constitutes "bubble valuations" is tricky at best.