The Psychology of Market Bubbles

Since market bubbles have been around for a long time and are likely to re-occur, it can be very helpful for investors to understand the psychological influences that lead to bubbles and crashes.  Stephen P. Utkus of Vanguard has outlined a four-stage model of market bubbles, including the psychological behaviors that characterize each stage.

Utkus' study also takes a look at how technology might actually amplify psychological tendencies, as well as the techniques to mitigate bubble psychology.  Click here for the white paper "Market Bubbles and Investor Psychology."  

Scott Middleton