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| Image via CrunchBase |
All is well, relatively calm, and semi-organized during the event. But when the game is over, chaos suddenly takes over.
Shouting Fire in a Crowded Theater
Entering the stadium is a breeze as other patrons arrive at different times preceding the event, but when the event concludes, it's usually a completely different story. Everyone rushes for the exits at the same time. The stadium hallways are packed, the crowd is immense, and the roads are parking lots. Sometimes it can take significantly longer to leave the event than it took to enter it.
This is the same analogy used for stock bubbles or parabolic price rises. Everyone slowly piles in, but eventually there is a trigger that sets off a cascade of selling resulting in a similar sort of chaos as investors all head for the same exit. When looking at a price chart of Apple (AAPL - News) some may say it is currently an example of a brewing bubble (more on that below).
Buyers come and go as they please at their own gingerly pace (in Apple's case for decades). Eventually the stadium gets full (buyers outnumber sellers) and the action takes place (stock goes up). But often when that action is complete there can be a rush out of the stock, as everyone heads for the same exit at the same time. Chaos can ensue and the stock falls far, fast. This of course has yet to occur for Apple. ... Continue to read.
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