A must-read for anyone in the stock market, October 28, 2000

Let me spill the beans right here: the trouble with prosperity, in Grant's view, is that people begin believing it will never end. As a result, financial decisions begin to be made - both by individuals and by institutions - during prosperous times that are based on too rosy a view of the future. When reality sets in and conditions turn out not as expected, those poor decisions end up creating imbalances in the markets that need to be corrected before economic health can begin anew. So lenders made more and more unwise loans in the late 80's... leading to a banking crisis. Real estate values rise on speculation and then crash. We are seeing at this writing some wrenching corrections and volatility in tech stocks based on too-optimistic views of their future earnings. And the list goes on.

Grant's view of the corrections are that they are painful but necessary, sort of like the occasional brush fire that clears out the old undergrowth and allows for new growth to begin again. His is an urgently needed message in an age of electronic brokers and cheerleading financial media. Read and heed what Grant has to say to help guard against your own 'irrational exuberance' in whatever market you are in and to help see your financial future in light of both prosperous times and their inevitable corrections.

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