Tuesday, October 11, 2005

Greed Turning into Fear

It is well known that one significant factor driving the housing bubble has been strong speculation. This is a speculative episode. Greed drives the speculators to speculate.

But, fear is actually a stronger emotion then greed. The greedy speculators have either cashed in or are left holding the bag. But, the cat is out of the bag. The bubble is now widely accepted. Those left holding, are increasingly fearful that the market has changed. Fear is now rising. Fear leads to selling. The rising inventory in the bubble markets is a key sign.