Manias, Panics, and Crashes: A History of Financial Crises

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   Bubbles spread not through numbers but through social comparison: the discomfort of falling behind someone close pushes you in late and dear.

   Manias, Panics, and Crashes: A History of Financial Crises · 1978

   A bubble spreads through the neighbor's envy, not through numbers: you buy late precisely because others visibly profit.

   Kindleberger, who studied centuries of financial crises, argues that every bubble follows a pattern: displacement, euphoria, then panic. The mechanism feeding the euphoria phase is not analysis but envy and the fear of missing an opportunity others visibly enjoy. When a neighbor or colleague is visibly winning, rational judgment gives way to the pressure not to be left behind, and late entrants inflate the price until it breaks. He points to the 1920s land and stock manias, when ordinary people entered markets they did not understand simply because everyone around them was making money.

   “There is nothing so disturbing to one's well-being and judgment as to see a friend get rich.”

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