I had this arguement with a guy on another thread when we were talking about naked shorting.
He said that shorting was good for the market(which I agreed) however he presumed that people who didn’t trade on fundmentals or even technicals were not “logical” and I said well let’s see... I can think of two recent examples of the masses pushing a market without being rational. The Tech Bubble and now the housing bubble. Being in banking I can’t tell you how many people were just dying to buy a house to “flip it”. I don’t see that too much these days.
The popularity of the house flipping shows, that show great profits for the investors has suckered in many people who didn’t have a lot of money to lose.
Even the wife and I had some aspirations of doing the same thing.
Glad we didn’t. Could have been stuck with property that may not move for months or years. would have been our fault. And nobody would bail us out.
As for the lenders who looked big profit in the eye with risky loans, there should be no bail out for them either.
The lure of fast money and greed fed the market for years.
Now people are re-discovering rational, sound financial management.
But rational financial management is not something our government is capable of. They just print more money to cover the debt, while American assets like Budweiser are being sold off piecemeal to foreigners. The cheap dollar will mean many more financial empires like Chevy or Ford will become foreign owned. Without those icons of industry and finance, how will America ever recover a superior financial standing in the world?