References (14)



Running with the Devil: The Advent of A Cynical Bubble

James Montier

Dresdner Kleinwort Wasserstein - Global Equity Strategy

January 16, 2003

Not all bubbles are born equal. We explore the nature and underlying psychology of four different kinds of bubbles, in order to assess which comes closest to describing the current market. To us, the current market environment is largely a greater fool market. Because such markets lack fundamental support, they are liable to precipitous declines. This is exacerbated when everyone seems to be watching the same indicator (earnings optimism). As Keynes noted when disillusion falls upon an over-optimistic and over-bought market, it should fall with sudden and catastrophic force.

Number of Pages in PDF File: 26

Keywords: Asset price bubbles, greater fool markets, rational bubbles, fads, myopia

JEL Classification: G00, G14, G12

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Date posted: January 26, 2004  

Suggested Citation

Montier, James, Running with the Devil: The Advent of A Cynical Bubble (January 16, 2003). Available at SSRN: http://ssrn.com/abstract=489262 or http://dx.doi.org/10.2139/ssrn.489262

Contact Information

James Montier (Contact Author)
Dresdner Kleinwort Wasserstein - Global Equity Strategy ( email )
20 Fenchurch Street
London EC3P 3DB
United Kingdom
02074756821 (Phone)
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