Finally, someone is forced to develop new yard sticks to explain what would otherwise make very little sense according to older measures. The bubble demands the creation and publishing of new measures of value to sustain what is primarily a psychological phenomenon. While investment in unproven new companies that have not earned money is a form of gambling, investors must cloak the strategy in something more substantial sounding. The bubble is closely associated with the Emperor's New Clothes . Those who study history will recall that periods of rampant speculation are usually followed by busts - periods of readjustment to reality.
Some people manage to time their investments so as to enjoy both the bubble and the bust.
They make money from change whether it is good change or bad change. These margin loans are usually backed with some kind of collateral like homes. When financial bubbles burst, sometimes the consequences are felt in very human ways, as we all recall photographs of formerly rich men lined up at soup kitchens in the Great Depression. Gold Rush 1848-1849 Brought more than 40,000 prospectors to California within two years. Few miners struck it rich.