The Rise and Fall of Financial Euphoria

This chapter explores the evolution of financial speculation from the late 1920s to the tech bubble, focusing on margin loans and the influence of key economists like Irving Fisher. It highlights the detrimental consequences of market euphoria, illustrated by historic events such as the stock market crash and the collapse of Pets.com.

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Episode notes

On today’s episode, Kyle Grieve discusses the anatomy of a speculative event, why it’s so easy for people to take part in them, and why these events are unlikely to stop in the future; a few major euphoric episodes from history outlined in the book, three more recent bubbles that most listeners lived though, why the rise in IPOs are often the result of mini bubbles, six primary takeaways from the book to help protect yourself from investing in bubbles, and a whole lot more!

IN THIS EPISODE YOU’LL LEARN:

00:00 - Intro

03:26 - The blueprint of a speculative event

04:10 - Why we fool ourselves into following people with money who don't deserve to be followed

10:04 - A contrast of risk tolerance between Benjamin Graham and Warren Buffet

15:13 - A detailed account of Tulipomania and the story of the $80,000 price tag for a Tulip

19:13 - How a convicted criminal helped mastermind one of the most giant bubbles in history

25:36 - The importance of due diligence in assisting investors to avoid bubbles

28:13 - How bubbles feed on themselves, opening pathways for other businesses to take advantage of the euphoria

34:56 - A few of the precipitating factors that caused the great depression and the damage it created

39:43 - Breaking down the "Dot-com" bubble, the Great Financial Crisis, and post Covid-19 euphoria

55:41 - Why investors should take responsibility for their wins and their losses

And so much more!

Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.

BOOKS AND RESOURCES

Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members.
John Kenneth Galbraith's book, A Short History of Financial Euphoria.
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