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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Mr.Creosote who wrote (42220)9/23/2005 8:50:18 PM
From: russwinter  Read Replies (3) of 110194
 
The financial irrationality mania behavior you describe here is what I call "the hook". This is a Granddaddy hook that has sucked a lot of people in. Interestingly there was not one single 2% down day the last two years, unprecedented, and of course strange. A must read book, to understanding the concept and resulting panic:
amazon.com

There is a general, repeatable pattern in how this irrational behavior plays out (a positive economic displacement is followed by euphoria that takes the form of overtrading, then distress following revulsion, discredit by lenders in the overtraded assets, and then panic leading possibly to a crash brought on by those who bought high).

I might add that an exogenous event (such as high impact hurricanes), can often bring about the revulsion event. Sometimes the response delayed. It took the Nifty Fifty market of 1973, several weeks to crash and burn after the oil imbargo began.
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