11-21-06 - 1

In the past 10-15 years, the investment philosophy of following the pack and jumping on bubbles has been incredibly profitable, assuming you got out somewhere near the peak. We had the dot com bubble, real estate, oil, gold, etc. People who have profited from these are often people who know nothing of smart investing and are cocky bastards. It's easy to dismiss them and these investments, but maybe there really is a valid strategy here. In this age of get-rich-quick day traders and soccer mom investment clubs, the markets are very swingy and people tend to pile on gaining sectors which pushes them up. Some investments might be very profitable even though you know they are over-valued; as long as enough of the populace is driving them up, you can ride the wave up and sell out.

In this theory, you could even make big money from those stocks that you get in spam emails. Assuming you're one of the first buyers, even if it's a junk stock people will send it up and you can ride the bubble. Certainly you can make money by buying a penny stock and then talking it up all over the internet, which is essentially what major banks have been doing for years.

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old rants