Investing Mania's
compare today with the old days
We find that whole communities suddenly fix their minds upon one object, and go mad in its pursuit; that millions of
people become simultaneously impressed with one delusion, and run after it, till their attention is caught by some
new folly more captivating than the first. (from the introduction of Madness of Crowds)
Extraordinary Popular Delusions And The Madness Of Crowds read a few of the chapters of this book
Another copy
Tulip bulb prices in 1637-actual prices
Enron Bob Jensen's long list of info
1929 newspaper stories about the stock market
C.C. Julian California Story of Great Los Angeles Swindle
Swindle--One of the best book by Jules Tygiel Good book(I have read it)
Photo and a short story about Leadfield
Multi-Level Marketing
The Emperor's New Clothes
The "Ponzi Scheme" another Ponzi description
The Great Diamond Hoax of 1872
Ida M. Tarbell's exposee of Standard Oil
Scams Involving Treasury Securities
Saving and Loan Crisis a chronology from the 1970's
Looting of US Savings and loans
List of some of the S&Ls
Lincoln S&L
Anthony "Tough Tino" De Angelis, perpetrator of the Great Salad Oil Swindle of the 1960s Time story
Billie Sol Estes obtained federal agriculture loans using phantom fertilizer tanks as collateral.
Bernie Cornfeld
Robert "Fugitive Financier" Vesco
Ivan Boesky
Hall of infamy list of them all
Have you ever tried to sell a diamond?
McKesson & Robbins scandal---Role of Samuel Broad
Long list of fraud by Bob Jensen
Equity Funding scam
Stock Certificate
The Great Depression
Mirage of Multilevel Marketing
Herbalife This is the story of how Herbalife works.
Hoax Index--great list of current hoax's
Museum of Hoax's--list by category
Great Civil War Gold Hoax
Nigerian Scam
Real Estate authors and where they ended up Another link
Ivar Kreuger, the "Match King." Always a swindler, transferring funds, credits, debits among 400 subsidiaries.
Organization chart Film Ivar "The Match King" Kreuger
Bernard L. Madoff
Here we go again - NY Times story Times Lists of investors --click here to see 163 pages of pdf list (See full
Madoff Client List) (this link is still good as of 2/13/2011) This is how it shows up: KLEIN FAMILY LIMITED
PTNR (KFLP) 5513 NO MILITARY TRAIL #702 BOCA RATON, FL 33496 KLEIN FAMILY LTD PARTNERSHIP 5513
NO MILITAR TRAIL BOCA RATON, FL 33496 KLEIN TEXAS FAMILY LTD C/O SAM KLEIN 5513 NORTH MILITARY
TRAIL #702 BOCA RATON, FL 33496 KLUFER FAMILY TRUST 720 MILTON RD N 1A RYE, NY 10580 LUFER
FAMILY TRUST 238 MAMARONECK ROAD SCARSDALE, NY 10583 KMJ ASSOCIATES LLC EXECUTIVE PLAZA
3443 HIGHWAY 66 NEPTUNE, NJ 07753 KML ASSET MGMT LLC II PO BOX 1269 NO PLAINFIELD, NJ 07061 KML
ASSOCIATES LLC EXECUTIVE PLAZA 3443 HIGHWAY 66 NEPTUNE, NJ 07753 KOMMIT PARTNERS C/O
RICHARD KOMMIT 342A BOYLSTON STREET NEWTON, MA 02459 KOMMIT PARTNERS C/O RICHARD
KOMMIT 19 ABBOTSFORD ROAD BROOKLINE, MA 02446 KONDI FAMILY INVESTMENT PARTNERSHIP C/O
EDWARD AND WENJA KONDI 105 VINTAGE ISLE LANE PALM BEACH GARDENS, FL 33418 KONIGSBERG &
WOLF ATTN: PAUL KONIGSBERG 440 PARK 163 pages of names
List of Victims
Another list of Victims
KL Group - Another hedge fund fraud
Petters Fraud Good video explaination Main Petters page
FBI Fraud speech
A new bubble does not start just as the last one crashes
Knox on how the people during wartime are cowered into submission and pay their taxes “without a murmur”
(1795)
Evergreen International Spot Trading, a currency trading outfit, and First Equity, its clearing firm, allegedly
devised an international boiler-room scheme that cheated investors out of $100 million. According to charges filed
by the U.S. Attorney's office, Evergreen used cold-calling to convince investors to trade in foreign currency, while
allegedly lying about its performance record. Most of the investors' money later was secretly channeled to bank
accounts in Hungary and Austria, where the obliging folks at Evergreen and First Equity withdrew it for their own
use and to pay millions of dollars in employee bonuses.
Enron-It happens in modern times. The Fall of Enron nice pdf file
Analyst reports to buy Enron
Stock market in 2001
Jan +3.2%
then down 15%
March-April +21%
then down 27%
Sept-Nov + 22% then?
The Secret World of Mike Milken by Epstein
If you have any good links let me know quarter@mc2k.com
Lessons on ZZZZ Best One great bubble from the 1980's
No two financial manias are alike, but were a mania a love relationship, it'd be a multi-year affair rather than a
one-night stand.
This is not what we imagine from watching footage of the most famous mania ending, the crash of 1929, the
first such collapse captured on film (and surely not the last). Grainy black-and-white documentaries leave the
impression that the market crashed on Black Monday and soup lines formed by Friday. In fact, the market
took some three years to bottom out and many mini-rallies took place along the way to the depths of the 90%
decline, dragging down many who escaped the first wave of destruction.
The 1920s bubble was only a few years in the making. Our bubble has had nearly six years to form. It cannot
be expected to disappear like that glorious rainbow-colored orb your brother maliciously jabbed. No, wrong
analogy. The word "bubble" does not convey the financial mania dynamic faithfully into the physical world.
Some manias run for a short intense period like a fireworks show run amok, quickly burning out. Others
develop in fits and starts, like a storm rising up in great waves, falling back, then rising still higher. The
current bubble is of the latter type. The storm has been raging for years. And lately, the waves are getting
pretty wild.
Every student of the markets knows psychology plays an important part in market dynamics, although no one
knows exactly how. No tools for measuring sentiment or other elements of market psychology have
statistically meaningful predictive powers. But at core, it's surprisingly simple. Humans mostly decide what to
do by observing others they perceive as similar to themselves, comparing the observed behavior to their
personal normative standard, and taking action that is an average of the two. Each individual has his or her
own reference point for what is "normal" behavior but an individual will act in ways that are very far from their
personal normative boundaries to a lesser or greater extent depending on, 1) the number of other people
"like them" who are behaving like each other and, 2) the length of time the group has been engaging in the
behavior.
A financial mania, like any aberrant and self-destructive group activity, grows as new entrants and the
passing of time legitimize the activity. Much research demonstrates this dynamic of human behavior,
including studies that followed the famous case of the woman who was stabbed to death over a period of
hours on a crowded New York City street many years ago. The studies concluded that if you are attacked,
you are far safer in the company of a single witness who is likely to judge the inappropriateness of the
attacker's behavior and take personal responsibility for your rescue. In a crowd, individuals take the inaction
of others as a cue that inaction is the right course, leaving you to your unhappy fate. It is no revelation to
apply this concept to group dynamics in financial manias, for as Charles MacKay observed way back in
1841's Extraordinary Popular Delusions And The Madness Of Crowds, "Men, it has been well said, think in
herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."
The individuals with the strongest will or motivation to employ their personal standards in contradiction to the
group's behavior naturally join in last. In the case of a financial mania, the most risk-averse members of
society join in when intuition misinforms them that the risk is at its lowest, because so many people are
involved and the mania has lasted so long. In fact, that's when the risk is at its highest. This is the so-called
"widows and orphans" stage.
The friend whose remark launched this piece is a financial advisor in Boston. She works for a staid firm with
many rich, elderly clients. She noted last week that she was beginning to get calls from her most conservative
clients, asking why she had not recommended the purchase of Internet stocks, angry that they were missing
out on the spectacular capital gains. These are men and women who lived through the crash of 1929. This
development alarmed her. And well it should -- for it portends the final stage of this financial mania, the one
that draws in the those who can least afford to lose, those too old to make their money back. They are also
the final source of new money for the mania, indicating that the mania is about to run out of fuel.
What sets up a market crash is the anxiety that forms from cognitive dissonance. As the mania progresses,
an ever-widening gap develops between each individual's reference point of normality and the extreme
behavior of the group. An unconscious desire to close the gap by any means intensifies over time. In the
latter stages of a mania a number of influential figures in the mania step up to address these anxieties with
elaborate justifications, such as Irving Fisher's "scientific" analysis of the New Era economy that "explained"
the historically unprecedented stock prices in 1929 and, in our time, recent books such as DOW 36,000 and
DOW 100,000. In spite of the analytical acrobatics, each mania participant's normative compass remains
intact and the anxiety persists, leading to the desire for mania participants to "throw themselves from the
precipice for fear of falling," in the words of Ambrose Bierce.
What causes each individual to jump is an unpredictable event that causes an epiphany. Imagine participants
in the 1920s mania viewing a film in 1930 of themselves in a soup line. Still think they'd standing in line to buy
stock with hard-earned money, or borrowed money? All this happens in the mind's eye during the epiphany.
Unfortunately for each individual, the destruction of the mania feeds on itself by the same process that
caused the growth of the mania: observed behavior of other participants. Whereas before they were all
buying because they saw everyone else buying, now they are all selling because everyone else is selling.
In my last piece, I identified the four events that will most likely trigger the mania's end: credit squeeze,
bankruptcy, fraud, or weakness in the real economy (or any combination). Since then three of these
elements have developed. Long-term interest rates have risen 250 basis points, the SEC indicted Tokyo Joe
for pushing stocks he owns, and home and SUV sales -- the bellwether consumer items of the mania -- have
begun to fall significantly. So far no high-profile bankruptcy has developed, but all that is required to create
an avalanche of bankruptcies is the failure of the Fed to quickly reflate the money supply after the next
correction; if public and private capital hides for more than a quarter or two, many unprofitable iTulip.com
companies will not be able to raise new capital in the markets to pay the bills. As these companies fail, more
capital will be frightened away from the market, causing more to fail, and so on.
The end of a mania is a sad event. So do not be impatient to see it end. For afterward, all that once seemed
a community of warmth and lightness and fun turns cold, dark and lonely.
ERIC JANSZEN
one-night stand.
This is not what we imagine from watching footage of the most famous mania ending, the crash of 1929, the
first such collapse captured on film (and surely not the last). Grainy black-and-white documentaries leave the
impression that the market crashed on Black Monday and soup lines formed by Friday. In fact, the market
took some three years to bottom out and many mini-rallies took place along the way to the depths of the 90%
decline, dragging down many who escaped the first wave of destruction.
The 1920s bubble was only a few years in the making. Our bubble has had nearly six years to form. It cannot
be expected to disappear like that glorious rainbow-colored orb your brother maliciously jabbed. No, wrong
analogy. The word "bubble" does not convey the financial mania dynamic faithfully into the physical world.
Some manias run for a short intense period like a fireworks show run amok, quickly burning out. Others
develop in fits and starts, like a storm rising up in great waves, falling back, then rising still higher. The
current bubble is of the latter type. The storm has been raging for years. And lately, the waves are getting
pretty wild.
Every student of the markets knows psychology plays an important part in market dynamics, although no one
knows exactly how. No tools for measuring sentiment or other elements of market psychology have
statistically meaningful predictive powers. But at core, it's surprisingly simple. Humans mostly decide what to
do by observing others they perceive as similar to themselves, comparing the observed behavior to their
personal normative standard, and taking action that is an average of the two. Each individual has his or her
own reference point for what is "normal" behavior but an individual will act in ways that are very far from their
personal normative boundaries to a lesser or greater extent depending on, 1) the number of other people
"like them" who are behaving like each other and, 2) the length of time the group has been engaging in the
behavior.
A financial mania, like any aberrant and self-destructive group activity, grows as new entrants and the
passing of time legitimize the activity. Much research demonstrates this dynamic of human behavior,
including studies that followed the famous case of the woman who was stabbed to death over a period of
hours on a crowded New York City street many years ago. The studies concluded that if you are attacked,
you are far safer in the company of a single witness who is likely to judge the inappropriateness of the
attacker's behavior and take personal responsibility for your rescue. In a crowd, individuals take the inaction
of others as a cue that inaction is the right course, leaving you to your unhappy fate. It is no revelation to
apply this concept to group dynamics in financial manias, for as Charles MacKay observed way back in
1841's Extraordinary Popular Delusions And The Madness Of Crowds, "Men, it has been well said, think in
herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."
The individuals with the strongest will or motivation to employ their personal standards in contradiction to the
group's behavior naturally join in last. In the case of a financial mania, the most risk-averse members of
society join in when intuition misinforms them that the risk is at its lowest, because so many people are
involved and the mania has lasted so long. In fact, that's when the risk is at its highest. This is the so-called
"widows and orphans" stage.
The friend whose remark launched this piece is a financial advisor in Boston. She works for a staid firm with
many rich, elderly clients. She noted last week that she was beginning to get calls from her most conservative
clients, asking why she had not recommended the purchase of Internet stocks, angry that they were missing
out on the spectacular capital gains. These are men and women who lived through the crash of 1929. This
development alarmed her. And well it should -- for it portends the final stage of this financial mania, the one
that draws in the those who can least afford to lose, those too old to make their money back. They are also
the final source of new money for the mania, indicating that the mania is about to run out of fuel.
What sets up a market crash is the anxiety that forms from cognitive dissonance. As the mania progresses,
an ever-widening gap develops between each individual's reference point of normality and the extreme
behavior of the group. An unconscious desire to close the gap by any means intensifies over time. In the
latter stages of a mania a number of influential figures in the mania step up to address these anxieties with
elaborate justifications, such as Irving Fisher's "scientific" analysis of the New Era economy that "explained"
the historically unprecedented stock prices in 1929 and, in our time, recent books such as DOW 36,000 and
DOW 100,000. In spite of the analytical acrobatics, each mania participant's normative compass remains
intact and the anxiety persists, leading to the desire for mania participants to "throw themselves from the
precipice for fear of falling," in the words of Ambrose Bierce.
What causes each individual to jump is an unpredictable event that causes an epiphany. Imagine participants
in the 1920s mania viewing a film in 1930 of themselves in a soup line. Still think they'd standing in line to buy
stock with hard-earned money, or borrowed money? All this happens in the mind's eye during the epiphany.
Unfortunately for each individual, the destruction of the mania feeds on itself by the same process that
caused the growth of the mania: observed behavior of other participants. Whereas before they were all
buying because they saw everyone else buying, now they are all selling because everyone else is selling.
In my last piece, I identified the four events that will most likely trigger the mania's end: credit squeeze,
bankruptcy, fraud, or weakness in the real economy (or any combination). Since then three of these
elements have developed. Long-term interest rates have risen 250 basis points, the SEC indicted Tokyo Joe
for pushing stocks he owns, and home and SUV sales -- the bellwether consumer items of the mania -- have
begun to fall significantly. So far no high-profile bankruptcy has developed, but all that is required to create
an avalanche of bankruptcies is the failure of the Fed to quickly reflate the money supply after the next
correction; if public and private capital hides for more than a quarter or two, many unprofitable iTulip.com
companies will not be able to raise new capital in the markets to pay the bills. As these companies fail, more
capital will be frightened away from the market, causing more to fail, and so on.
The end of a mania is a sad event. So do not be impatient to see it end. For afterward, all that once seemed
a community of warmth and lightness and fun turns cold, dark and lonely.
ERIC JANSZEN
ZZZZ Best Company
This is a note that Barry Minkow sent me.
He was on the Oprah Winfrey Show.
Greenspan & Co.,CPA certified the numbers.
Ladenburg, Thalmann & Co., Bob Grossmann issued a
ten page research report with several interesting
statements: "...one of the largest and best financed
companies.....is among the most profitable public
companies anywhere.....$23-28 per share sometime
within the next 12-15 months and $36-48 over the next
24 months." Report dated March 9, 1987 (Plus they
made a market in the stock).
Guess what the stock is worth today??
This is a note that Barry Minkow sent me.
He was on the Oprah Winfrey Show.
Greenspan & Co.,CPA certified the numbers.
Ladenburg, Thalmann & Co., Bob Grossmann issued a
ten page research report with several interesting
statements: "...one of the largest and best financed
companies.....is among the most profitable public
companies anywhere.....$23-28 per share sometime
within the next 12-15 months and $36-48 over the next
24 months." Report dated March 9, 1987 (Plus they
made a market in the stock).
Guess what the stock is worth today??