Quotes on Market Bubbles

One of the important factors behind the fluctuation between bull and bear markets, between booms and crashes and bubbles, is that investor memory has to fail us – and fail universally – in order for the extremes to be reached.

You never get a bubble until the public, the brokerage community, the financial institutions, the pension funds, and even the universities are all involved.

One of the biggest mistakes you can make is to think that overpriced and going down tomorrow are synonymous. Markets that are overpriced often keep going.

Every bubble has two components: an underlying trend that prevails in reality and a misconception relating to that trend.

If you’re going to invest in stocks for the long term, or real estate, of course, there are going to be periods when there's a lot of agony and other periods when there's a boom. I think you just have to learn to live through them.

When people are looking for performance they sharpen their pencils and find reasons to buy.

I always look for red flags. My major red flag all the time is when long governments yield 600 basis points over the yield on the S&P 500. At that point, stocks have always been overpriced.

It is a curious fact that although all booms are alike, all are different.

Wall Street in boom days is an aggregation of madmen. The Stock Exchange becomes Bedlam well dressed.

In the beginning of a stock market boom it is ever the "dear public," the fleecy lambs, the most guileless victims, who make the most money. They really do not know when to stop winning, and so in the end they lose profit and principal.

One thing all of us know for sure is that the stock market doesn't go down just because a lot of folks think that it has entered the heart of looney land.

Hoaxes, frauds, manias, and other large-scale financial irrationalities have been with us from the beginnings of the markets in the seventeenth century, long before the Internet.

In a speculative market, what counts is imagination and not analysts.

What we do know is that speculative episodes never come gently to an end. The wise, though for most the improbable, course is to assume the worst.

I didn't get rich by buying stocks at a high price-earnings multiple in the midst of crazy speculative booms, and I'm not going to change.

The trading favorites of 1928 were high-priced, untried, and unseasoned stocks that made one wonder whether the public did not think that the higher the price the better the stock.

It is one of the common pieces of Wall Street experience that when the public goes stock mad and the market leaders are filled with the arrogance of prolonged success, such little things as high money rates or decreases in earnings or unraised dividends have no instant effect on the market -- that is, on the state of mind of the speculating public. In the end, of course, all violations of the fundamental laws of economic and financial common sense are paid for; but every bull thinks he will unload before the break.

It is easy enough to burst a bubble. To incise it with a needle so that it subsides gradually is an operation of undoubted delicacy.

The tour we've taken through the last century proves that market irrationality of an extreme kind periodically erupts -- and compellingly suggests that investors wanting to do well had better learn how to deal with the next outbreak.

History shows us, over and over, that bull markets can go well beyond rational valuation levels as long as the outlook for future earnings is positive.

Human nature being what it is, small loopholes are likely to be exploited until they become big ones, and big ones until they turn into financial disasters.

At the root of all financial bubbles is a good idea carried to excess.

If the market's going wild and you want to be in it, you either have to lower your standards to stay in the game or you buy stuff which may not participate because it's not part of the game at that time.

Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation.

As a rule, Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works.

Once a boom is well started, it cannot be arrested. It can only be collapsed.

Booms start with some tie-in to reality, some reason which justifies the increase in asset values, and then -- and this is the critical feature of speculative mood -- the market loses touch with reality.

The Street, unfortunately, is fairly well inured to the bursting of bubbles.