With reference to the Selzer and Torres reading "A historic look at greed an fear in market phenomena", is bitcoin a bubble an how would you tell?Make sure to provide convincing arguments both for and against.Remember: if you say it is aa bubble, you must think you are smarter than Elon Musk since Tesla bought $1.5 billion in bitcoin in February 2021.

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Abstract

A financial collapse is rarely foreseen and tends to occur while things are going well. It tends to occur with a heavily indebted private sector because, as sentiment is so high, debt is used to finance investments. Bubbles occur due to an over-concentration in one sector, market or nation. The consequences of herd mentality can be severe. The human mind tends to reach a higher level of irrationality during a panic then during a mania. Market manias and crashes are examined from the perspective of human behavior and the role that economic and financial experts have played with regard to them, and what financial planners can learn to help protect their clients from these market-clearing events.

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Market bubbles.They may clear out overconcentrated or stagnant markets like forest fires clear out old growth, but they can be deadly for your clients.The authors examine market manias and crashes from the perspective of human behavior and the role that economic and financial experts have played with regard to them, and what financial planners can learn to help protect their clients from these market-clearing events.

A battle is taking place between modern portfolio theory and behavioral finance, and the battle is receiving the publicity of a Muhammad Ali versus George Foreman fight. We assume, primarily, that this is because both sides are such large self-promoters. At the center of the fight are anomalies that behavioral finance proponents use to attack the fundamental structure of modern portfolio theory. One type of anomaly is a market bubble, alternatively called a mania and subsequent crash. The accompanying analysis attempts to analyze the mania and crash in a larger social and historical framework.

The first step is to try to broaden our understanding of capital markets. In the broadest sense, capital markets are simply a reflection of the underlying society. In the mechanistic sense, capital markets are a formalized way to facilitate the interplay of supply and demand. In the economic sense, capital markets are a derivative of the economic cycle. And finally, the most widely understood definition of a capital

market is a place where securities are bought and sold, information is made available, prices are set and liquidity is provided. By examining each of these three definitions, we should be able to broaden our understanding of capital market history.

Human Behavior and Capital Markets

Capital markets as a sub-set byproduct of society? Now that is a scary thought. The contention of this view is that mannerisms, characteristics or other behaviors that we observe in society will be present in sub-sets of society, including the capital markets. Our primary analysis is concerned with any characteristic that can lead to a "mania." Manias rely upon the herd mentality whereby an impetus drives the masses in one direction. The prevailing rationale should not be surprising, as society provides numerous examples of herd mentality in the form of fads. A fad is something-a toy, activity, dance or even just some weird gizmo-of questionable value that is suddenly in demand "by everybody."' Table 1 concentrates on late 20th century product fads, since those are the most easily quantified.

We can also look at capital markets as a mechanism that facilitates the process of supply and demand. Table 2 illustrates the interplay of supply and demand on some nonfinancial products. Two characteristics of supply and demand interacted in each of these instances to set some exorbitant prices. The first characteristic is that there must always be a limit to the supply. The second characteristic is that demand is highly personal. These same two factors are present in capital markets although they get smoothed out by a large number of investors. To assume that people are willing to collect and pay monetary premiums for teddy bears,2 Beanie Babies,3 baseballs4 and other memorabilia5 but not for certain stocks, would be to draw a line of bipolar rationality that is not substantiated.

The third way to view capital markets is as a derivative of the economic cycle, whereby individuals invest in and benefit from the creation of real economic growth. In the extreme case, there would be no economic activity and thus, no capital markets. Figure i shows the major U.S. economic cycles. The continuation of the chart would show a wild re in the early 1990s and a subsequent expansion. The economic cycle is not smooth with linear growth, but rather a series of booms and busts. Accordingly, capital mrs as a derivative and leading indicator to the economic cycle, are not smooth either.

Understanding Manias and Crashes

By understanding markets in a broader sense, we begin to move beyond modern portfolio theory and gather the framework necessary to understand what leads to a mania and subsequent crash. Along with this broader understanding, the key principles of a financial collapse must be understood.

First, a financial collapse is rarely foreseen and tends to occur while things are going well. Positive sentiment and new era mentality are not a defense against financial collapse, but rather a necessary condition for a "bubble" to occur.

Second, a financial collapse tends to occur with a heavily indebted private sector because, as sentiment is so high, debt is used to finance investments. Of course, when things go bad, people are so overextended that they cannot use debt as a safety net.

The third principle is that bubbles occur due to an over-concentration in one sector, market or nation. The problem is not that people are investing in a bad idea.

The problem is that so many people see the value of a good idea that too much capital rushes to support it, and then we see an over-concentration of assets into that good idea. Finally, significant collapses tend to involve more than one object of speculation, as the proceeds from the first object create a sense of wealth that gets invested in a second area. The most common second object of speculation is real estate.

The crash of the Japanese market in 1990 demonstrates all of these principles well. In the late 1980s it was hard to pick up a paper and not read an article about the "Pacific Tiger" and how the Japanese economy was the model for the future. Although many suspected that the Japanese stock market was overvalued, very few foresaw the devastating crash that was to come.

To demonstrate, let us back up to the early 1980s to set the stage. At that time, the United States was driving global demand. By 1985, the U.S. current account had fallen to a deep deficit. The current account for a country measures the difference between exports and imports. Thus a negative current account indicates that the United States was buying more than they were selling to rest of world. Around this time the current account deficit became a concern for the United States and it started to take some measures to reduce it. Central banks sold dollars in the open market and asked other countries to increase their global demand.

FIGURE 1

Selling dollars depreciates the dollar in relation to other currencies. With a less valuable dollar, imported goods look more expensive to Americans while American goods look cheaper to residents of other countries. The call for other countries, most notably Germany and Japan, to increase their demand was the fear that if the United States reduced its global demand, the slack could cause international economic problems. While Germany basically ignored the request, Japan took several steps to try implementing the requests.

The Japanese Central Bank began selling dollars for yen, depreciating the dollar and appreciating the yen. They also tried to increase demand using monetary policy. In 1985, the Japanese Central Bank lowered the discount rate from five percent to three percent. Despite the measures, the balance of trade between the United States and Japan was still widening. In 1986, the Japanese Central Bank lowered the discount rate once more to 2.5 percent and the spark turned into a flame.

The low cost of debt spurred individual consumption and investment. Japanese corporations, notorious for taking on projects with low marginal net present values, used cheap, short-term debt to take on new ventures. As capital pouring into the stock market grew, the value of the stock market, according to the laws of supply and demand, also grew. The wealth effect began to set in, whereby investors began to feel wealthy because of the paper value of their portfolios. This in turn led to a rise in real estate, particularly commercial real estate. The price of commercial real estate in the largest six cities rose by almost 500 percent between 1982 and 1990.

TABLE 1

TABLE 2

TABLE 3

By 1989, Japanese officials were getting nervous about the price levels of the stocks and real estate, as well as the inflation that was starting to creep into the economy. They raised the discount rate to 4.25 percent without any real slowdown in the economy. The Nikkei flirted with 40,000 in the beginning of 1990 (as compared with 12,000 in 1985) as the discount rate was dramatically raised again to six percent.

It is generally accepted that the resulting crash occurred due to a combination of an overvalued market (concentration of capital), an overextended private sector (high debt) and a tightening monetary policy. Capital losses in Japan between 1990 and 1996 totaled 976 trillion yen, or about two years of Japanese gross domestic product (GDP). Commercial real estate fell back to its pre-boom levels, and ten years later, the Nikkei is still at only 50 percent of its peak value.

Creative Displacements

So what caused the Japanese market to move out of equilibrium and beyond the rational framework of modern portfolio theory? To explain markets moving out of equilibrium, we turn to economics and a phenomenon known as a displacement. A displacement is an event that changes horizons, expectations, profit or behavior. A displacement can be endogenousinternal to the system, like deregulation, or it can be exogenous-external to the system, like war. Displacements can have monumental impacts on a society, on supply and demand, on the economic cycle and, of course, on capital markets. In the extreme, displacements can even destroy companies and ruin capital markets. The examples below illustrate the impact of change, in the form of displacements, on companies and capital markets.

In 1896, the Dow Jones Industrial Average moved away from tracking railroads to tracking leaders of industry with an initial list of 12 companies. Of the original 12 companies, there is only one company, General Electric, that is still listed in the Dow Jones Industrial Average. Table 3 details the original companies listed in 1896 and their updated status.'

Joseph Shumpeter spoke of "a perennial gale of creative destruction" in his 1942 book, Capitalism, Socialism and Democracy. Creative destruction is related to displacements because entrenched companies and market leaders attempt to maintain their market leadership by adhering to the status quo. Entrepreneurs use, and even create, displacements in order to adjust the rules of the game. Indeed, many companies were consumed by "creative destroyers," or were simply left to die on the vine as displacements forced dynamic capital market shifts.

Historically, in the extreme, these displacements not only destroyed companiesthey also destroyed markets. Laurence B. Siegel, a director of policy research at the Ford Foundation, examined the case of an equity investor faced with the decision of globally diversifying a portfolio of securities in 1900.' Given the knowledge of the world at that time, an investor would probably have invested in the United Kingdom and in another established economy such as Germany. As for rising powers, the United States and Argentina had similar economic strength and Japan and Russia were showing promise. All six of these countries had capital markets in 1900 and all six of these countries have capital markets in 2000. However, Table 4 shows that an investor who followed a buy and hold strategy in 1900 would have lost the entire investment in four of the six capital markets because

the displacements were large enough to destroy the capital markets.

Displacement in 53 BC

Displacements can have a large impact on an economy without having to destroy companies and markets. It is easy to try to disregard economic events in ancient Rome as examples of lessons that can be transferred to modern markets. We tend to feel that there cannot be any comparability between today and a time that did not have any jet travel, electronic funds transfer, ATMs or the Internet. But the banking and political system of Roman times had much in common with ours. And they also had to confront and adjust to displacements.

In ancient Rome, there existed money lenders who had store fronts right on the Forum. Credit was lent for all purposes and at interest rates that floated according to supply and demand. Ancient Rome was also a republic, where an elected senate made laws. To examine the impact of displacements, we examine Rome in 5 3 BC, an election year. The years leading up to this were some of the most prosperous in Roman history. The wealth and confidence of the general population were high; one result was a boom in real estate. In the Roman Republic, the only way one could be a voting citizen was to own property. Many borrowed the money required to purchase their land.

Although political corruption was fairly common in the Roman republic, this particular election was extremely scandalous. Julius Caesar, attempting to prolong his political career, had made some political contributions and deals of his own and managed to obtain the modernday equivalent of governor of the province of Gaul (modern-day France). This position was a stepping stone for Caesar on his way toward becoming the head of state of Rome. As the corruption of many of the senators became public, the Roman citizens began to lose confidence in the system and the displacements began to hit the Roman economy.

The senate was elected and immediately decided to recall Caesar, surely ending his political career. He did return to Rome, but with his entire army in tow. Caesar won the resulting civil war, and inherited an economy hit by the major shock of war. Once the war was over, money was needed to pay the various armies and rebuild cities. As the coin left Rome and went to the farthest reaches of the empire, the citizens of Rome were feeling the dwindling money supply. With little confidence in the government or stability, hoarding became common.

The shrinking money supply pushed interest rates up and encouraged money lenders to call in their loans. The borrowers could not find the money to repay the loans and were forced to sell their property in order to meet their debt. Real estate values began to fall rapidly as a glut of property was placed on the market. This only compounded the problem as borrowers who had purchased at the peak of the boom could now fetch only a fraction of their loan from selling their property. In ancient Rome, there were no bankruptcy laws. If you owed someone money and could not pay back your debts, you generally went to jail or became their indentured servant. With a large portion of the workforce facing jail or slavery, the economy began to crumble. Caesar, watching the economy of Rome disintegrate, moved to take action. The measures he took are interesting to consider. First, he forbade hoarding. This was an obvious attempt to keep as much money as possible in circulation. Second, he obliged creditors to accept land and movable goods as repayment. In addition, he set the value of all property at its precrash level. In effect, this created a form of bankruptcy, allowing individuals to escape slavery and jail and remain in the productive workforce.

TABLE 4

It seems the measures may have stabilized Rome for the short run, but it is hard to tell for the long run. Many of the senators and their associates were closely tied to the money lending business, which was most negatively affected by these edicts. On the Ides of March, 44 BC, Caesar was assassinated in the senate, leading to several more years of civil war.

Can We Prevent Crashes?

Caeser showed that experts can help after a crash has occurred. The next question lies in whether the experts can actually prevent a crash. To answer that, we turn to the market crash of October 29, 1929. To set the stage, we look at a society overextended with total debt outstanding by corporations, government and individuals equal to 190 percent of GDP. Even more disturbing than the record debt was the use of margin debt. During 1929, an investor could purchase a security by putting down only ten percent of the value of the security. As of September 1, 1929, the $5.8 billion in brokers' (margin) loans amounted to 9.5 percent of the capitalization of the entire stock market.8 Consumer confidence was very high, as the Roaring Twenties were aided by relatively lax monetary policy until early 1929. Significant advances in technology increased productivity, including transportation by automobiles and airplanes, advances in electricity and home appliances, and of course, improved assembly line efficiency for the production of goods.

Despite the general positive sentiment of the times, did any experts foresee and try to avert the upcoming crash? The answer is yes. Roger Babson, a leading economist, not only warned of the market crash but also of the depression. In a lecture he gave on September 5, 1929, he stated that "A crash is coming which will take in the leading stocks...factories will shut down... the vicious cycle will get in full swing and the result will be a serious business depression."'

The government also attempted to do its part. Roy Young, a Federal Reserve governor in 1928, said "I am laughing at myself sitting here and trying to keep 125 million people from doing what they want to do."" What they wanted to do was buy stocks and they wanted to finance those stocks with short-term debt. Even Herbert Hoover, the newly elected Republican president, stated publicly that he thought stocks were overvalued.

Yet the mania and the subsequent crash still occurred, despite these warnings. Why? In many instances, the predictions were too early. Roger Babson had been issuing the same warning for years and had liquidated his clients' stock portfolios two years before the crash. He had lost credibility as the Dow Jones Industrial Average had more than doubled during those two years.

The second problem is that there are, of course, too many other "experts." Irving Fisher, a famous Yale economist, issued his infamous prediction on October 16, 1929, two weeks before the crash, that "Stock prices have reached what looks like a permanently high plateau. I do not feel there will soon be, if ever, a 50- or 60point break below present levels, such as Mr. Babson has predicted."" The Harvard Economic Society issued a similar statement a few days after the crash: "A severe depression such as 1920-21 is outside the range of probability; we are not facing a protracted liquidation."" As for the government's effort to finally tighten up monetary policy, it soon realized its inability to redirect the herd. Benjamin Anderson later wrote in his 1949 book, Economics and the Public Welfare, "The lure of the stock market profits had caught the public attention and the change in Federal Reserve policy, designed to restrict the supply of money, met with an overpowering increase in the demand for money. 11 Finally, the motives of experts will always come into question as experts attempt to become famous, politicians campaign for re-election and journalists try to sell papers.

Artificial Bubbles

We have just seen that experts are more able to clean up after the fact than to actually avert a financial collapse. But can they use their knowledge and ability to manipulate a crowd into an artificial bubble?

Common terms for such a feat would be "scheme" or "swindle." Just as with financial collapses, there also tends to be a common basis for schemes or swindles. Primarily, sophisticated schemes rely on self-deception by the participants. Only in the later stages of a mania do we see overt deception by the sponsors.

Second, a scheme requires a plausible-- sounding but complicated profit opportunity and requires waves of investors with appropriate timing and publicity. The scheme relies upon larger and larger waves of investors to come in to supply the capital appreciation needed for the earlier investors.

Finally, unlike economic activity where real wealth is being created, schemes and swindles require redistribution of wealth to the early (chain letters), to the lucky (lotteries) or to the skillful (poker).13

It is interesting to note that the historical example we use to demonstrate schemes and swindles, the Mississippi Scheme/South Seas Bubble, actually started out as a well-intentioned plan to boost trade, the economy and the wellbeing of states. Although they took place in two different countries, involved slightly different structures, and occurred at offsetting times, we refer to the Mississippi Scheme and South Seas Bubble as one joined event because they are very closely related.

The story starts with a Scottish-born traveler, gambler and self-styled economist named John Law. In the course of his travels, Law developed an economic theory relating countries with paper currency and increased trade. Law appears to have been the kind of man who, when in social company, and having had a few drinks, liked to tell everyone about his great ideas. At some point Law grabbed the ear of the French duke of Orleans, who was left with the impression that Law was very knowledgeable in financial and economic matters.

It so happened that relatively soon afterward, King Louis XIV of France died. His son Louis XV being only seven years old, the Duke of Orleans was named Regent of France until Louis XV came of age. Louis XIV had been an opulent ruler in his lifestyle and his wars, which had left the country pretty heavily in debt and the economy on the brink of collapse. One of the new regent's first orders of business was to invite his friend John Law to be an economic counselor. This being the opportunity Law had dreamed of, he accepted and immediately proposed a national bank be established whereby gold would be taken as deposits and paper be issued as currency. His request was granted and in 1716, the Banque Generate was incorporated. The idea was extremely successful. International trade and the economy showed signs of strengthening in a very short time.

FIGURE 2

TABLE 5

Law's next idea was to reduce the national debt. He proposed that a company be given a sole monopoly on trade with the American French colonies. Shares of the company, known as the Mississippi Company, were to be traded for the notes of French debt. The stories of gold and riches in the Americas spurred excitement and demand for the shares. The plan was another instant success. The demand was so great that in 1719 the company and the bank were merged together, given the sole monopoly on trade to all French colonies, and renamed the Company of the Indies.

A mania began to develop, lifting the price of shares by almost 400 percent in less than a year. People and money began to pour into Paris from the rest of the country and even from other countries. The British, seeing gold move across the English Channel, created an extremely similar company in London, known as the South Seas Company. This company assumed the national debt in exchange for a monopoly on trade with British colonies. The public reception to the company was the same as for the Mississippi Company.

At this point, in 1719 and 1720, there was a frenzy on both sides of the English Channel. People from every walk of life rushed to the narrow alleys where the stocks were traded, pockets full of money, ready to buy stock with the confidence the stock price would only go up. By early 1720, the final and largest wave of investors was filling the alleys. Profiteers realized the fervor and unfulfilled demand to buy stock and helped to fill it. They set up booths in the alleys, posted their prospectuses and began to issue shares. These operations, at best questionable and many outright fraudulent, were known as "bubbles" and is where we have derived the word we use to describe a mania. Figure 2 contains pieces of some of the prospectuses from this period.

Note that many of the first bubbles sounded plausible. These were offers to participate in the cutting-edge industries of the time: factories, mines and shipping. As the mania worked into more of a frenzy, the schemes became overtly unreasonable. When the public is investing in a company that will not tell them what it does, it is a pretty good indication that the top of the mania is near.

During a mania, most of the participants are speculators and not investors. In mid1720, the speculators who knew they were speculators began to see that the top was near. As they started to cash out, more and more people started to realize that there was not much backing up the paper they were holding. The prices crashed as the populace suddenly desired cash. The crash took down the Mississippi Company, the South Seas Company and the bubbles alike.

Financial Forest Fires

So, what are the consequences of fear and greed? Again, we turn to examples outside the financial realm to observe behavior. We ask the question, "What do people value most?" The obvious answer would seem to be their lives. We looked at examples of manias: concerts in the United States. We also looked at examples of panics: soccer matches worldwide during the 1980s.

Despite the gruesome details outlined in Table 5, a couple of valuable lessons may be learned from these examples." The first lesson is that the consequences of herd mentality can be severe, including the loss of life. The second lesson is that the human mind tends to reach a higher level of irrationality during a panic then during a mania. The quandary here is that it can be entirely rational for an individual to act in a certain way, but if a group, as a whole, were to act in the same way, it would be considered irrational. For example, if the lights were to go out and you headed for the door, that would be considered rational behavior. But if everyone in a group were to head for the door at the same time, causing people to die, then that group would be considered to have acted irrationally.

So how do you avoid getting "trampled?" Part of the answer lies in understanding economics because it covers a wide scope of factors and scenarios. There are economic theories that encompass factors such as technology and money supply. Vincent Riscasio writes of economic functions that attempt to understand the impacts of technology and innovations. For example, in the case of innovations, economics models explain this as a shift in the "production-possibilities frontier." The S curve of technology can be combined with the First Mover theory to understand that rarely do the innovators profit from a given invention and that the "Creative Destroyers" will ensure that no technology or business model will dominate for long. And, of course, it is important to understand the role monetary policy has on the economy. The reason that the markets micro-interpret every piece of data used by the Fed to determine monetary policy is because of the impact monetary policy can have. Small changes in policy or the money supply can feed greed in the market, and they can also put on the brakes and cause fear to spread. The best action financial advisors can take is to dust off their old economics books and attempt to view the capital markets within the long-term framework of economics.

The final question is: Why do these financial collapses occur? Financial collapse, like a forest fire, can be viewed as a destructive tool that is necessary for an ecosystem to prosper. A financial collapse can liquidate the debt burden that, left unchecked, can serve as a drag on the economy. We learned that the purpose of debt can erode over time and the remaining unproductive debt can serve as a drag on the economy. A financial collapse can make the marginal purposes of the debt so unprofitable that the debtor has no choice but to default on a large scale. The financial collapse, like the fire, can remove the undergrowth that would inhibit the growth of entities more likely to prosper in the ecosystem.

A wide-scale financial collapse also can shift the assumptions that form our reality. For example, the conservation movement was greatly enhanced by the 1970s energy crisis, the Federal Reserve system was created after the panic of 1907, and the Securities and Exchange Commission was formed after Black Tuesday. The fact is we allow the experts, either for good or bad-- through regulations, agencies and leadership-to play a different role in our lives. Finally, recall that economic theory states that a resource should be allocated to its highest and best use. Each panic (and its cause) has been due to an over-concentration of capital into one area, leading to over-valuations. This shift may be observed even on a global basis, depending upon where the capital has been concentrated (such as Japan in 1989, the United States in 1987 or gold in 1980)."

Even though theory states that capital should move to its highest purpose, there are legal and psychological barriers to this movement. The fact is, a collapse becomes the impetus to remove these barriers. During a crash, capital flees to other markets for a higher and better use.

People are also resource inputs, sometimes needing to be reallocated as well. Despite the Industrial Revolution, 40 percent of the U.S. civilian workforce was still employed in agriculture in 1929. As horrible as the Great Depression was, with unemployment rising to 25 percent, this economic disaster forced labor away from the farm and into the manufacturing base where it began to acquire new skills. By 1980, agriculture employment had fallen to a mere three percent. 17 So whether it be monetary capital, human capital or other inputs into an economic system, drastic financial collapses are necessary in order to reallocate the resources.

Doomed to repeat it? The question remains unanswered by us. We only ask that you consider the question in a broader scope. The answer to the question is not as important as the components of the question: an understanding of history, the role of fear and greed, the use of the term "doomed," the role of the experts and the repetition of events. Our advice is to learn the lessons of history, use the tools of economics and view the capital markets a bit differently.

Footnote

Endnotes

Footnote

1. Fads of the 20th Century (New York: Golden Turtle Press).

2. Peter Millership, "Teddy Bears with Pedigrees Command Royal Prices," Chicago Tribune, December 24, 1989, Section: Tempo; Zone C, p. 6.

3. Ava Van de Water, "In a Daze Over Beanie Baby Craze," The Palm Beach Post, May 22, 1998, Section A, p. 1A.

4. Michael Grunwald, "One Fan's $3 Million Catch," The Washington Post, January 13, 1999, Section A, p. AO 1.

5. Ibid.

6. "The Original Dow Industrials," Industrial Maintenance & Plant Operations, Industry Newsline, December 31,1999,p.6.

7. Laurence B. Siegel, "Are Stocks Risky? Two Lessons," Thejournal of Portfolio Management, Spring 1997, pp. 29-34.

8. Floyd Norris, "Ideas & Trends: Marginal Behavior; This Bubble Sure Looks Familiar," The New York Times, April 9, 2000, Section 4, p. 4.

9. Alistair Blair, "Equity Markets: Waiting for doom till doomsday," Financial Times, March 2000, Section: Equity Markets, p. 2.

10. Norris, op. cit.

11. Vern Hayden, "Echoes of '29: Things Are Different Now, or Are They?" The Street.com, April 12, 2000, Section: Personal Finance.

12. "The Collapse of Wall Street and the Lessons of History," Friedberg Mercantile Group, March 16, 1997.

13.John Kay, "Inside Track: A guide to get rich quick scams," Financial Times, May 3, 2000, p. 21.

14. "World Disasters," Wisconsin State journal, October 31, 1993, p. 3A.

15. Vincent Riscasio, "Commentary; Unraveling an e-nigma" Business World, April 3, 2000, p. 5.

16. Martin A. Armstrong, "The Anatomy of Crisis," Unpublished dissertation in

Footnote

History, PEI History Department.

17 Ibid.

References

Resources

References

1. United States Department of Agriculture, "A History of American Agriculture 1776-1990," http://www.usda. gov/history2/textl.htm, May 12, 2000.

2. Horst Seibert, "Some Lessons From The Japanese Bubble," Kiel Working Paper No. 919, May 1999.

3. PEI History Department, "Great Monetary Crisis of 53 BC," http://www.peiint.com/Research/PANICS/53BC.HTM, May 12, 2000.

4. The Bubble Project, "The South Sea Bubble: A Short Sketch of Events," http://is.dal.ca/-dmcneil/sketch.html, May 12, 2000

5. Charles Mackay, Memoirs of Extraordinary Illusions and the Madness of Crowds (1852, reprint ed., Boston: L.C. Page Co., 1932).

6. Charles P. Kindleberger, Manias, Panics, and Crashes, A History of Financial Crisis (1996, John Wiley & Sons, Inc.).

AuthorAffiliation

Mr. Selzer is senior investment analyst for Portfolio Management Consultants in Denver, Colorado. He is responsible for quantitative and qualitative analysis of U.S. equity separate account managers.

AuthorAffiliation

Mr. Torres is senior vice president of consulting services for Portfolio Management Consultants. He is also a senior consultant and manager of the Consulting Department.

Copyright Institute of Certified Financial Planners Nov 2000