Dangers of Herd Psychosis
The tech mania of 1996-2001 was an extreme example of herd psychosis. People with no savings borrowed on their credit cards to buy the hottest stocks. The phenomena was worldwide. Respected financial journalists recommended individual companies and advocated buying the dips. The gold and silver mania of the late-1970s was equally alluring. Investment advisors advocated 100-percent asset allocation to precious metals. Japanese real estate mania reached epic portions in 1989. A single property in Tokyo was worth more than all of Manhattan. The Tokyo crash and price adjustment continues more than 13 years later.
Those of you who find you have been sucked into more than one bubble, consider investments that are not prone to herd psychosis. If you find yourself always in bubbles and crashes, addiction is a possibility.
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