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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: tradermike_1999 who started this subject1/11/2002 1:43:31 PM
From: carranza2  Read Replies (2) of 74559
 
I commend to all the BBR regulars an article in the current issue of the New Yorker dealing with the bull market and its demise. A more or less factual history of the bubble, its bursting, and Uncle Al's role. Not comprehensive but well-balanced and valuable. I don't recall the name of the author.

I was struck by a paragraph on Soros and his view on how bubbles start and why they go on. He uses a term, "reflexivity", which he says describes the psychologically self-generating and self-propelling nature of a bubble's momentum. Interestingly, Soros himself became a bubble-maniac and lost a ton along with everyone else. Because the article is relatively brief, there was no in-depth discussion of Soros' views or how "reflexivity" works.

It seems that reflexivity might also account for irrationally bearish markets, in which the psychology of doom propels the markets to lows which do not comport with underlying economic realities. Might explain the anomaly Buffett discusses in the December issue of Fortune-- the stock market's persistent failure to align itself with economic fundamentals.

This is all very interesting. How does one manage to make a buck out of it is the question for the average investor like the readers of this Board. The answer, presumably, is to be a contrarian,
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