Manias sweep up clever people too. Everyone doing it is not proof.
Crowds go mad together.
Everyone is talking about it. Buy or skip? Swipe. Don’t think.
When everyone is buying, the price already holds their hopes.
← Red LinesRed Line 37 of 48 The idea The story Where you see it Where it bends This game’s numbersHow strong the proof isCMixed proof Where it comes from
When a price keeps rising, more people buy because others are buying, and the rise feeds itself. It ends when there is nobody left to buy.
In the Dutch tulip craze of 1636-37, single rare bulbs changed hands for the price of a house. Within weeks of the peak, buyers vanished and prices collapsed.
When a share or a coin is the talk of every dinner and every feed, the people who were going to buy have mostly bought.
Sometimes the crowd is simply right. Check the facts, not the mood.
Oxford: Newton and the South Sea BubbleOdlyzko: Newton’s financial misadventuresSmithsonian: there never was a real tulip feverReviews in History: Goldgar, TulipmaniaStock market downturn of 2002 (Wikipedia)Quartz: the Nasdaq back at its dot-com peakBloomberg: Nikkei overtakes its 1989 highJapan Times: Nikkei at a 26-year low, 2009Fortune: a year after bitcoin’s highGameStop short squeeze (Wikipedia)AP: GameStop shares after tumbling for much of FebruaryMotley Fool: Nvidia up 171.2% in 2024
Bubbles and crashes are real, and a sharp run-up raises the odds of a crash, but the crowd is often right too, and the tulip story was smaller than the legend.
- Bubbles for Fama Robin Greenwood, Andrei Shleifer & Yang You, Journal of Financial Economics 131(1), 20-43, 2019
- Tulipmania: Money, Honor, and Knowledge in the Dutch Golden Age Anne Goldgar, University of Chicago Press, 2007
Checked 2 Nov 2026 · How we grade
- A Strong proof: Many good studies or long official data, from different teams or countries, point the same way.
- B Good proof, with limits: Solid studies agree on the direction, but the size varies, or the data covers few places or few kinds of people.
- C Mixed proof: Some good studies for, some against, or the evidence covers only part of the line.
- D Thin proof: Mostly one book’s argument, one survey or stories. It may be wise, but it has not been tested well.
- = True by the sums: It follows from arithmetic, so no study can overturn it. We still show what real data says.
Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds (1841). In our words, not quoted.
See it in numbers: Herding (From Zero)
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