Why Market Run Out of Buyers

Sort of the same thing happened in 2008. Normally what happens is that when the market drops, you have more people that want to buy at a lower price.

The trouble is that when things go into a panic it does not work this way. So the price drops suddenly, instead of thinking this is a great deal, I will buy, you do nothing, so then the market freezes and things just get worse.

Also if it turns out that I don't have any cash, and I cant buy, things get really bad. I have no cash, because the market is crashing so I cant buy anything but because the market is crashing I have no cash.

In 1987 and 2008 something like that happened, and what the Fed did was to flood the markets with cash so that people would start buying and stabilize the markets.

This what happened again in 2020 and 2021.

Why It Is Difficult To See A Bubble

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.