More Money With a Flop? What Bubbles Teach Us About Timing

"It is just as fitting when it is used to describe the psychology of economic bubbles, when timing, grift, and enthusiasm can turn flops into fortunes (or the reverse). Bubbles are not particularly rare events. They are recurring features of human group behavior, surfacing in everything from the South Sea Bubble in the 1710s to railway rushes, dot-com booms, and the rapid expansion of data centres."

"Bubbles tend to look irrational, and there is certainly irrational behaviour that surrounds them. Why would so many smart people throw vast amounts of money at things that obviously can't all succeed? Yet bubbles persist because they are not only economic events, but they are also psychological ones. For many bubbles, the technology turns out to be transformational (railways, energy, telecoms, the internet, and data centres). The money and the enthusiasm are not entirely misdirected, but the timing and intensity may be off."

"People look at past technological waves like the internet, smartphones, and social media and think: If only I'd been there early. That regret vastly amplifies the desire to be first next time, even if "early" means buying into something untested, overpriced, or still years from practical use. It's easy to look at the Google or Amazon stock price history and imagine buying early, and even easier to forget that at the time you might have chosen the now defunct favourites like Geocities or AskJeeves."

Bubbles are recurring phenomena driven by psychological dynamics as much as economic fundamentals. Enthusiasm, timing, and grift can turn technological transformations into overvalued markets. Early-mover fantasies and regret about missed opportunities propel investors toward untested or overpriced innovations. Availability bias amplifies successful origin stories while erasing thousands of early failures from memory. FOMO drives rapid buying even when practical utility remains years away. As a result, capital and excitement may not be entirely misplaced, but misaligned timing and excessive intensity produce boom-and-bust cycles across industries. Historical examples include the South Sea Bubble, dot-com boom, railway rushes, and data centre expansions.

Read at Psychology Today