“Quis furor, รด cives” – Lucan “What madness was this, my countrymen?” This quotation was in Lucan’s civil war epic but is equally applicable to the craze caused by a financial bubble. Looking back on times where investor’s decisions making ability was impaired by a forming bubble, there is no other word that comes to mind than madness . This so-called mania is a product of investor’s susceptibility to decision making affected by biases. Investors revert back to simple beliefs or biases like correlation is causation, or it is easier to attribute success to skill, although luck was the only thing that affected their success. These biases send investors into crazes of overconfidence and constant self-attribution that are all traits investors attempt not to possess. The infatuation that comes over an investor throughout the time of a bubble is similar to that of the Botrytis Blight disease that inhabits the beloved Dutch...
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