| Re: Did the Implosion of the U.S. Tech Stocks Bubble Help Fuel Its Real Estate Bubble
"Bubbles" are simply another instance of the "greater fool theory" at work: "Ok, maybe I'm foolish...I know this tech stock/this house/this tulip bulb/ this whatever isn't really worth what I'm about to pay for, but in a very short while, I'll sell it to a bigger fool for a profit."
In the case of housing, the "safety net" effect also provided considerable encouragement to flippers: "Ok, houses can't continue to go up in price like this forever, but I know that if I have to, I can hang on long enough and eventually I'll come out okay... over the long term, house prices have always gone up." |