Reality cannot be ignored except at a price; and the longer the
ignorance is persisted in, the higher and the more terrible becomes the
price that must be paid.
-Aldous Huxley, English writer (1804 - 1963)
Read more: http://www.investorwords.com/13411/housing_bubble.html#ixzz22L9OtOIP
"The last two years were just too disgusting a spectacle," Drucker said. "Pigs gorging themselves at the trough are always a disgusting spectacle, and you know it won't last long."
Drucker termed Wall Street brokers "a totally non-productive crowd which is out for a lot of easy money."
"When you reach the point where the traders make more money than investors, you know it's not going to last," he said.
"The average duration of a soap bubble is known. It's about 26 seconds," Drucker said. "Then the surface tension becomes too great and it begins to burst.
"For speculative crazes, it's about 18 months."
LINK: http://seattletimes.nwsource.com/html/businesstechnology/2002619202_webdrucker11.html
About Peter Drucker:
Place of birth: Vienna.
Education: LL.D. in international law from Frankfurt University.
Famous quotes:
"Nothing is less productive than to make more efficient what should not be done at all."
"Because knowledge deteriorates rapidly unless it is used constantly, maintaining within an organization an activity that is used only intermittently guarantees incompetence."
-Aldous Huxley, English writer (1804 - 1963)
bubble
Definition
A description of rapidly rising equity prices, usually in a particular sector, that some investors feel is unfounded. The term is used because, like a bubble, the prices will reach a point at which they pop and collapse violently.
Definition
A stock market phenomenon which occurs when the stocks in a particular sector are inflated out of proportion to their intrinsic value in response to exaggeratedly high expectations of resale value. The bubble is said to burst when stock prices suddenly go into a decline which is then compounded by panic selling of shares. Also called speculative bubble, price bubble, economic bubble.
Famous Bubbles:
Dutch tulip bulb market bubble
Definition
An actual market bubble that took place in Holland during the 1600's when tulip bulbs were traded as commodities due to the high value placed on them by the elite. Extreme demand led to price acceleration that eventually led to a severe market crash which destroyed many fortunes.
housing bubble
Definition
A considerable rise in the price of houses produced in part by the belief that the prices will keep increasing.
Read more: http://www.investorwords.com/13411/housing_bubble.html#ixzz22L9OtOIP
It's Hard to Look Outside a Bubble When You are Stuck Inside It
by Tom Murcko
When you're inside a bubble, it's difficult to realize the bubble exists. In 1989 the Japanese stock market had a higher market cap than all the other stock markets in the world, combined. The Emperor's Palace in downtown Japan was assessed to be worth more than all the real estate in California. When times are great, it's most tempting, but most dangerous, to extrapolate forward and think the good times will last forever.
Peter F. Drucker had seen it all before:
After the big stock market decline of October 1987, Drucker said he had
expected it, "and not for economic reasons, but for aesthetic and moral
reasons."
"The last two years were just too disgusting a spectacle," Drucker said. "Pigs gorging themselves at the trough are always a disgusting spectacle, and you know it won't last long."
Drucker termed Wall Street brokers "a totally non-productive crowd which is out for a lot of easy money."
"When you reach the point where the traders make more money than investors, you know it's not going to last," he said.
"The average duration of a soap bubble is known. It's about 26 seconds," Drucker said. "Then the surface tension becomes too great and it begins to burst.
LINK: http://seattletimes.nwsource.com/html/businesstechnology/2002619202_webdrucker11.html
About Peter Drucker:
Place of birth: Vienna.
Education: LL.D. in international law from Frankfurt University.
Famous quotes:
"Nothing is less productive than to make more efficient what should not be done at all."
"Because knowledge deteriorates rapidly unless it is used constantly, maintaining within an organization an activity that is used only intermittently guarantees incompetence."
