Bubble-hunting has become more art than science

With the usual gauges of frothiness out of action, behavioural signals are all investors have

Aug 18th 2020|4 min read

UPON BEING sucked into investing during the South Sea Bubble, Sir Isaac Newton reflected that he could “calculate the motions of the heavenly bodies but not the madness of people”. From tulip mania in 17th-century Amsterdam to railway fever in Victorian Britain, history is littered with tales of investors who lost their heads shortly before they lost their shirts, in the grip of mass delusions described by Alan Greenspan, a former chairman of the Federal Reserve, as “irrational exuberance”.

This article appeared in the Finance & economics section of the print edition under the headline “Foam party”