The Psychology of Speculation by Henry Howard Harper

While there are various danger signals which indicate the culmination / of a bull market, just as there are others which mark the final stages / of a bear market, it must not be supposed that these signals stand out / like so many red lights placed in front of a ditch at the roadside; / on the contrary they are of the most deceptive and decoying nature to / all except experienced and dispassionate observers. And even the best / judges are frequently deceived. On this point one of the most reliable / financial writers in the country says: "Not all of the economic indicia / ever turn together at any peak or bottom in the securities markets. / Always the case is that some of the indicia disclose the change, while / others do not. The public usually keeps on expecting a bull movement / to continue, no matter how unreasonably high stocks may sell. This / persistence of bullish sentiment greatly facilitates distribution by / wealthy holders. " This timely note of warning was written early in / January of the present year, when a great bull market after running / about two years was at the boiling-over point; but very few bullish / traders ever pay any attention to such counsel; nor would they if the / danger signals stood out like beacon lights along a treacherous shore. / A few days later the following bit of good advice was issued by a / Boston broker:

"For fifteen months this country has enjoyed clear skies, politically, / economically and financially. Washington Irving begins his essay on / the Mississippi Bubble with the phrase, ‘There was not a cloud on the / horizon,' and then goes on to state that the prudent mariner takes / cognizance of such ideal conditions and prepares for the inevitable / change. Today, after fifteen months of national sunshine and cloudless / skies in all directions, we believe it behooves a man of affairs to / take counsel with himself relative to his investment and speculative / position. Many business men who should have learned better by past / experience, still take the business situation as a guide to their / stock market operations in spite of the fact that all stock exchange / history shows that the market turns up long before a period of business / depression has run its course and likewise turns down six months or / more before prosperity comes to a pause."