Stages of market mania

What is obsession? It is defined as a mental illness characterized by great excitement, euphoria, delirium, and hyperactivity. When investing, it translates into investment decisions driven by fear and greed without the results of analysis, reason or risk equilibrium. The obsession usually goes hand in hand with the development of the product business, but time can sometimes be skewed.

The tech boom of technology.com in the late ’90s և Today’s boom in cryptocurrencies are two examples of how mania works in real time. These two events will be highlighted in this article at each stage.

Idea stage

The first stage of madness begins with a great idea. The idea is not yet known to many, but the potential for profit is huge. This is usually translated as unlimited profit because “such a thing has never been done before.” The Internet was one such case. People who used paper systems of the time were skeptical, because “how can the Internet replace such a familiar, entrenched system?” The backbone of the idea begins to build. This translates into modems, servers, software կայ websites that were needed to turn the idea into something tangible. At the idea stage, investments start to get dull, made by “knowledgeable” people. In that case, it could be the visions of the people working on the project.

The same question is asked in the world of cryptocurrencies. How can crypto code replace our monetary system, contract system և payment systems?

opportunities:

The first websites were rude, limited, slow, and annoying. The skeptics would look at the words “information highway” that the visionaries were shouting. “How can this really be so useful?” The forgotten element here is that ideas start at their worst and then develop into something better and better. This is sometimes due to better technology, larger scale, cheaper costs, better use of the product in question, or better familiarity with the product, combined with excellent marketing. Early adopters come in on the investment side, but there is still no euphoria աբ astronomical income. In some cases, the investments have brought in decent returns, but not enough to make the masses jump inward. In the world of cryptocurrencies, this is evidenced by the high cost of coin mining, slow transaction times, account breakdown or theft.

Acceleration:

Word gets out that this և “.com” is the hottest new thing on the Internet. The product և tangibility is built, but the cost պատճառով due to the mass scale involved և the time will be huge until everyone uses it. The investment aspect of the equation begins to outweigh the business development as markets diminish business potential at the cost of investment. Euphoria begins to materialize, but only among early adopters. This is happening with the explosion of new “altcoins” in the world of cryptocurrencies, the big media press that is gaining space.

Euphoria

At this stage, the parabolic incomes and potential offered by the Internet prevail. They do not think much about implementation or problems, because “the returns are huge, I do not want to miss.” The words “irrational abundance” և “mania” are becoming commonplace as people go shopping out of sheer greed. Negative risks ությունը negativity և largely ignored. Symptoms of addiction include: Any company that has a com.com in its name is hot-tempered, the analysis is thrown out the window in favor of optics, investment knowledge is becoming less and less popular among newcomers, expectations of a return of 10 or 100 tariffs are normal, few really know how the product works or does not work. It happened in the world of cryptocurrencies at the end of 2017 with a stellar yield of hundreds of percentage points of the company’s shares, using the “blockchain” in their name. There are also “reverse buy offers” where counterfeit companies listed on the stock exchange but dormant change their name to something related to the blockchain, and the shares are suddenly actively sold.

The Crash and Burn:

The business landscape of a new product is changing, but not as fast as the investment landscape. Eventually, a change of mindset occurs, քի a huge increase in sales begins. Instability is massive, many “weak hands” are left out of the market. Suddenly, analyzes are used again to substantiate that these companies have no value or are “overestimated”. Fear is spreading, prices are falling faster. Unprofitable companies that survive because of the turmoil and the prospects for the future are stunned. Cases of increasing fraud’s use of greed are exposed, causing more fear վաճառ selling securities. Entrepreneurs who have money are quietly investing in new products, but progress is slowing down because a new product is an “ugly word” until profits are convincingly shown. This is starting to happen in the world of cryptocurrencies with the folding of credit schemes using cryptocurrencies ավելի higher cases of coin theft. Some of the marginal coins are depreciating due to their speculative nature.

Survivors:

At this stage, the investment landscape is burning with stories of losses and bad experiences. At the same time, the great idea becomes tangible, it’s a boom for businesses that use it. It begins to be implemented in daily activities. Products are starting to become standard, և visions quote that the “information highway” is real. The average user notices an improvement in the product և it starts mass acceptance. Businesses that have a real profit strategy are hit hard in the crash phase, but if they have the cash to survive, they move on to the next wave. This has not yet happened in the world of cryptocurrencies. Expected survivors are those who have tangible business-corporate support, but it remains to be seen which companies and coins they will be.

The next wave. business is hippie

At this stage the new product is standard, և the profit becomes obvious. Business is now based on profit: scale, not idea. A second wave of investment emerges, starting with these survivors and spreading to another early stage obsession. The next stage was characterized by social media companies, search engines, online shopping, all of which are derivatives of the original product, the Internet.

Conclusion:

Maniacs work with a pattern that plays the same horse over time. Մեկը When one recognizes the stages of each stage and the thought process, it becomes easier to understand what is going on և investment decisions become clearer.