JES, you are correct in my opinion – examaning behavioral elements, such as herd mentality, of market movement is critical. (I do think that a certain amount of this is shown in historical price movement because I mostly subscribe to the efficient market theory, but that’s another topic).
I’d argue that speculation is nothing new. An excerpt from “The Next Little Dollar” by Mike Davis, the first section from the book Under the Perfect Sun: The San
Diego Tourists Never See (interesting read):
“Although there were no industries and few farms to support the increase, San Diego (population 2,637 in 1880) had swelled to more than 40,000 residents by the winter of 1887. The city’s boom economy seemingly consisted of speculators selling land to other speculators . Four hundred realtors were busy subdividing enough lots for the
population of one million that some zealots were predicting for San Diego by 1900… Like the cloud city of Laputa in Gulliver’s Travels, San Diego defied the laws of economic gravity… Then, in 1888, the boom abruptly collapsed, and San Diego’s inflated land values came crashing back to earth… (As one ruined speculator supposedly told a local paper: “I had a million dollars wiped out in the crash, and
what’s worse, $500 of it was in cash.”)”
