Why many people in the latter stages of a stock market bubble [or other financial bubble] fail to see the bubble before it bursts, while a few do recognize a dangerous bubble before it bursts?
You have cause and effect reversed. When most people perceive the market as a bubble, the bubble bursts. The top is when the pendulum swings from more money coming in because the price keeps going up because more money is coming in—to more money fleeing because the price is falling because more money is fleeing.
Bubble tops are rarely market by major fundamental news. One day sentiment turns around, for no obvious reason, other than the supply of new investors and new money dries up; and all the people who only bought because the price was going up, get out.
Nobody knows when or if it will burst maybe it’s just a small correction maybe a big one. The not knowing keeps people invested. Additionally you might be lucky to have gotten out before it burst but then it’s really hard to be double lucky when to get back in. So most people just ride it out. Less headache.
Time in the market vs Timing the market.
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