Warren Buffett: The Cinderella Syndrome in Investing
In his 2000 Berkshire Hathaway Annual Letter, Warren Buffett warned investors about the dangers of speculation and irrational exuberance. Reflecting on the market mania of the late 1990s, he wrote:
“The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money.”
These words resonate just as powerfully today as they did then. When the stock market is soaring, investors often convince themselves that high valuations are justified, that the rules of investing have changed, or that historical norms no longer apply. The belief that everyone can get rich…
