"Why Everything That Rises Turns into a Bubble"

Bull markets are born on pessimism, grown on scepticism, mature on optimism, and die on euphoria.- John Templeton

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The above quotes accurately explain how a bull market progresses through different phases and how it ultimately ends. Each phase is characterized by distinct features. While ?????????????? ???? ?????????? ???? ?????????????????? ?????????????? ?????? ?????? ???????????? ???? ?????????????????? ????????, ???????? ?????????????????? ?????????????? ?????????????? ??????????????????????????????.

I recently read a book about investor psychology, the author describes how an experienced investor developed his strategies based on the prevailing sentiments of the general public and the news circulating at the time. He mastered the concept of the "law of vibrations," demonstrating that the mental attitudes driving market movements have remained consistent over centuries.

These four mental attitudes are not easy to quantify. Unlike economic or financial models that rely on data and empirical evidence, ???????? ???????????????????? ???? ???????????????????? ????????????????????—???? ?????? ???? ???????????? ?????? ?????? ?????????????????? ??????????????????. ??????????????, ?????? ???????????????? ???? ???????????????????? ?????? ??????????????????.

We know that prices are driven by supply and demand, but human emotions play a significant role in influencing these forces. For instance, why do people tend to raise the demand when prices are rising and supply more when prices are falling? ?????????????????? ?????????????????? ?????? ?????????? ?????????????????? ???? ?????????? ???????????? ???????????????? ???? ????????????????. While bubbles can be observed visually on charts, predicting their end requires monitoring key parameters, such as the continuous inflow of money into the market.

When investors cease to act independently and instead make decisions based on the actions of others, herd mentality takes over. This behavior skews demand forces, often leading to a dramatic rise in prices, followed by euphoria and sharp reversals. Sudden news events can act as catalysts, amplifying fear among investors. The final phase of a bull market is typically marked by rapid price movements, causing investors to rush into buying shares. This phase often sees large participants distributing their holdings at elevated levels, while smaller investors find themselves trapped.        

The purpose of discussing market bubbles is to highlight how many individuals can become trapped in these situations, often leading to substantial financial losses. By being attuned to market conditions and the underlying signals, you can avoid significant losses or even capitalize on the sharp fluctuations in prices.

Your time and attention are greatly appreciated.

Please note that the views expressed are personal.

Thank you.

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