3mania Phase
Mania Phase
The narrative dominates rational analysis. Retail participation explodes, prices rise parabolically, and anyone questioning the thesis is dismissed. New financial products emerge to "democratize access." This is the most dangerous phase for new entrants.
Warning Signals
- Non-experts giving confident advice
- Price increases justify themselves
- Valuation metrics dismissed as outdated
- Celebrities and influencers involved
- New retail products for easy access
- Media coverage becomes breathless
- Stories of overnight millionaires
Common Mistakes to Avoid
- Believing "this time is different"
- Using leverage at the peak
- Ignoring all warning signs
- Mocking skeptics
- Assuming prices only go up
Detection Checklist
- Non-experts confidently giving advice
- Non-experts confidently giving advice
- Price increases used to justify more increases
- Price increases used to justify more increases
- Traditional valuation metrics dismissed
- Traditional valuation metrics dismissed
- Celebrities and influencers promoting
- Celebrities and influencers promoting
- New products making access easier
- New products making access easier
- Stories of ordinary people getting rich
- Stories of ordinary people getting rich
- Skeptics mocked or ignored
- Skeptics mocked or ignored
- Leverage being used widely
- Leverage being used widely
- Everyone seems to be talking about it
- Everyone seems to be talking about it