Real estate bubble market psychology

Financial markets are fear and greed, two basic human emotions. Rationality and careful analysis, not responding or forecasting the current or future level of prices in the bubble markets, prices show the emotions of buyers and sellers are responsible.

Psychology speculation bubble is driving the markets, but also because of the nature of fear and greed, the majority of speculators are doomed to lose their money. In contrast to the real investors are not subject to the emotional cycle of speculation, and are capable of rational decisions based on fundamental values. Of course, many investors do not have enough excitement in the growth of the rally in prices on a speculative bubble.

The great American real estate bubble was inflated, people trading houses. Residential real estate is the nature of the goods, and the same price as a chaotic market speculation. This behavior was confirmed by the creditor, the funding that enabled speculators mortgages as an option to use contracts with the risk of loss of the creditor.

For losses, a person must have a grieving process. Given the fact that markets are the actions of these people, the markets have the same psychological stages in the price of the shares. Efficient market theory attempts to explain the market prices through collective action by rational market participants. This theory does not explain the irrational behavior demonstrated in the bubble markets. Behavioral finance theory attempts to explain the irrational exuberance.

This course in the bladder has a different impact on beliefs and behavior of individuals and society as a whole. These beliefs and behaviors can be pathological in nature to the suffering and social problems. As with any form of mass suffering, it is a call for government action on the proposed purchase and false hopes in populace.Lawrence Roberts is the author of the major real estate bubble: why the housing prices this fall?

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