Bubbles are hilarious creatures. While you’re inside one, it feels like you’re at a rave with free champagne — music’s thumping, everyone’s dancing, and even your Uber driver is giving you stock tips. The only person not smiling is your sensible uncle in the corner muttering something about “valuation metrics,” which you ignore because hey, line go up.
Then the music stops. The champagne is gone. The lights flicker on, and you look around to see you’ve been dancing with a sock puppet named “LunaCoin.”
And that’s when the Hindsight Halo descends. Suddenly everyone insists they “knew it was a bubble.” CNBC replays clips of skeptical analysts. Twitter fills with “of course it crashed” threads. Everyone is Nostradamus after the fact.
Why it feels so sneaky
Here’s the thing: bubbles don’t wear name tags. They wear disguises. Dot-coms looked like the future of commerce (and, to be fair, they were — just not for Pets.com). Housing in the 2000s looked like the American Dream. Crypto looked like digital freedom. All of them felt like common sense at the time.
Psychologists call it “creeping determinism” — your brain backfills the story with fake certainty once you know the ending. It’s like watching a horror movie the second time and yelling at the character: “Don’t open the door!” But when you first saw it, you were just as spooked.
🔗 If you want a trip down memory lane, here’s Investopedia’s tour of history’s greatest bubbles.
Bubble goggles: the anatomy of mania
Every mania comes with its own set of bubble goggles:
- Narrative Gravity: A story so good it warps markets (internet! blockchain! tulips!).
- Liquidity Mirage: Everyone’s trading, everyone’s making money — until suddenly nobody can sell.
- Echo Trades: Herds repeating the same moves until the canyon walls shake.
Put these together, and you get the perfect party storm.
How to avoid waking up broke
You can’t. Okay, that’s a little dramatic — but the truth is, avoiding bubbles entirely is impossible. We’re human, and humans are suckers for good stories.
The trick isn’t to avoid the party. It’s to leave before the DJ packs up. That means:
- Don’t believe liquidity is permanent.
- Don’t confuse echoes with signals.
- Don’t let a shiny story blind you to execution.
The wink to the reader
Next time a bubble inflates, don’t waste your breath swearing you’ll never fall for it. Just remember this: hindsight makes everyone smug, but foresight makes you rich.
And if you do end up dancing with another sock puppet? At least make sure it’s wearing something fabulous.
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