In the past 10 years, we have witnessed two of the four biggest asset bubbles in U.S. history: the Nasdaq in 1997-2000, and the mortgage bubble of 2005 (and counting). (5/3/07 update: a third mega-bubble is now taking shape in private equity.)
Irrational exuberance runs rampant, it seems. Why?
Interestingly, this historical anomaly has occurred at almost exactly the same time that SRI drugs (seratonin reuptake inhibitors, including Prozac, Paxil, etc.) rose to prominence, with millions of prescriptions written. Their express purpose: to make you exuberant, regardless of circumstances.
Not to say SRIs don’t serve a legitimate purpose. But somebody ought to run a regression analysis of Prozac prescriptions against Nasdaq — there’s a story there.