There’s always a new one doing the rounds: A crazily overpriced tech start-up; a hot new pharmaceutical; something, with no numbers attached, that’s going to change the world; a tree that will grow to the sky.
As the speculators rush in, the stock rises. Reinforced in their enthusiasm, they buy more, putting the price still higher. New speculators rush in. Soon the whole self-confirming perpetual motion machine is grossly overinflated, beyond any reasonable value. Eventually short-sellers, see the balloon is stretched taut; more and more puffers don’t seem to be able to blow it up any bigger. They move in, hoping to buy-back at half, a third or a tenth of the price...
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