82 ATaleofTwoMarkets
on that stock, it is reasonably likely that you will win; if you bet on
everything that comes down the track, it is most certain that you
will lose.
Those who bet on everything coming down the trac kadd hot air
to the bubble. It is a large-scale version of the mania that leads to
around-the-bloc klottery lines during hefty jac kpots. What creates
most bubbles is the whiff of great riches from something new that
excites people and leads them to irrational behavior or at least herd-
like behavior.
The wildfire of excitement is spread by unchecked rumors of
champagne and caviar dreams come true—stories of riches, rein-
forced by greed. The frenzy spirals, but ultimately breaks. In reality,
only one person wins the lottery jackpot and the multitudes experi-
ence the most expensive case of “monkey see, monkey do.”
Edwin LeFevre put it nicely: “The appeal in all booms is always frankly to the gambling instinct aroused by cupidity and spurred by pervasive prosperity. People who loo kfor easy money invariably pay for the privilege of proving conclusively that it cannot be found on this sordid earth.”^13 Real investors are not the same people who wait in long lottery ticket lines. They realize that “get rich quick” usually means “get poor quicker.” For a bit of de ́ja vu, consider Graham’s observation from the late
1960s: “The speculative public is incorrigible. In financial terms it
cannot count beyond 3. It will buy anything, at any price, if there
seems to be some ‘action’ in progress. It will fall for any company
identified with ‘franchising,’ computers, electronics, science, tech-
nology, or what have you, when the particular fashion is raging.”^14
In Yogi Berra “it’s de ́ja` vu all over again” style, note this similar
vintage Graham lament: “Bright, energetic people—usually quite
young—have promised to perform miracles with ‘other people’s
money’ since time immemorial. They have usually been able to do
it for a while—or at least to appear to have done it—and they have
inevitably brought losses to their public in the end....[I]t is prob-
ably too much to expect that the urge to speculate will ever disap-
pear, or that the exploitation of that urge can ever be abolished.”^15
The urge to speculate endures, with vast numbers of people
seeming to accept the declaration of hyperventilating venture capi-
talists and day traders that the new economy of the late 1990s and
early 2000s means that the old rules of the game no longer apply.
An extraordinary statement of these times was uttered by the chief