Good Morning!

We start with a pattern that never seems to go out of style: prices soaring on hype, collapsing on reality, and investors acting surprised every single time.

This week alone offers a front-row seat to the emotional theater of modern markets. The Dow and Nasdaq rallied hard on news of a possible tariff rollback—proof, once again, that a single headline can swing billions in value. Tesla shares popped after Elon Musk promised to pay more attention to his own company (a sentence that says everything about the logic at play here). Apple and Meta got hit with an €800 million fine from the EU and… their stocks went up anyway. Because penalties are just the cost of doing business when the vibe is right.

Meanwhile, Philip Morris hit record highs, OpenAI’s leadership drama escalated, and investors continued to pile into the AI gold rush with the same wide-eyed enthusiasm that powered the dot-com boom, the housing bubble, and crypto’s rise and fall. The names change, the story doesn’t.

Welcome to Part Two of Irrational Thinking in a Logical Economy. Today, we’re unpacking hype cycles and bubbles—the recurring fever dreams where belief outweighs math, vibes overpower valuation, and even the smartest players forget that momentum is not the same thing as value. Because in markets, the question isn’t if there will be another bubble. It’s which one you’re already in.

-JD

In partnership with Money Pickle

At Skool Projekt, we believe the real lessons—the ones that shape your future—aren’t always taught in school. Like how to manage money, build wealth, or make sense of an economy that doesn’t always play by the rules. A good financial advisor is part of that education. They’re not just picking stocks—they’re helping you make smarter, more informed choices about your money and your life.

From retirement plans to investment strategy, from tax decisions to big life transitions, the right advisor brings clarity where there’s usually confusion. Because when it comes to your financial future, guessing isn’t a strategy—it’s a gamble.

 Coming up in Tuesday’s edition:

We’re diving into the magic (and mess) of Disney. How a company built on fairy tales, theme parks, and mouse ears became one of the most complex machines in media. From IP hoarding to box office dominance to streaming wars and CEO drama, Disney isn’t just selling stories—it’s shaping culture. This isn’t about happily ever after. It’s about how control, nostalgia, and brand power can turn a castle into a corporate fortress.

Part 2 of 10 in Irrational Thinking in a Logical Economy
by JD Washington

Hype Cycles and Bubbles

Markets are supposed to be logical. That’s the story we’re told, anyway. Prices are meant to reflect the facts—earnings, supply and demand, future growth potential. Stocks go up when the outlook is good, and down when it’s not. Simple. Clean. Rational. But if that were really how markets worked, the history of finance would look very different. There would be no bubbles, no crashes, no stories of irrational manias where prices soar into the stratosphere only to come crashing back to earth. Yet over and over again, we see markets behave not like logical systems, but like emotional organisms—surging on excitement, collapsing on fear, responding less to spreadsheets and more to feelings. Speculative bubbles and hype cycles aren’t rare accidents in an otherwise rational machine. They’re the system, laid bare. They’re the proof that markets run just as much on belief and emotion as they do on math.

This is why every generation seems to have its own signature bubble—the dot-com craze of the late ’90s, the housing boom of the 2000s, the crypto and NFT frenzy of the 2020s. These aren’t fringe moments. They are central to how markets behave. At the heart of each one is the same emotional fuel: fear of missing out (FOMO), herd mentality, overconfidence. These aren’t deviations from rational decision-making—they are the default settings of human behavior when money is on the line. A bubble happens when prices stop caring about the fundamentals and start chasing the vibe. It stops being about what something is actually worth and becomes about what people believe it might be worth, especially if everyone else seems to believe the same thing. The logic becomes self-reinforcing and circular: prices are going up, therefore prices will keep going up. This isn’t analysis—it’s momentum. It’s not about the numbers—it’s about the story.

The hype cycle works in much the same way. It begins with a spark—some promising new technology or idea that grabs the imagination. Artificial intelligence. Blockchain. The metaverse. The promise of transformation spreads faster than the technology itself can deliver. Expectations inflate to absurd levels, fueled by breathless headlines, speculative investing, and the human urge to believe that we’re standing at the edge of a breakthrough. Question the frenzy, and you’re dismissed as a cynic or a Luddite. Skepticism becomes a dirty word. But hype cycles always run into the same problem: reality takes longer than the narrative. When the tech doesn’t live up to the overnight expectations, disillusionment follows. But by that point, fortunes have been made—and lost—and the damage is already done.

What’s crucial to understand is that these cycles of boom and bust are not glitches. They are exactly what happens when a financial system built on numbers meets human psychology. Markets don’t swing purely on earnings reports or balance sheets. They swing on mood. They swing on whether people feel optimistic or scared, whether they’re chasing dreams or running for the exits. And that mood is powered by impulses as old as human nature itself. FOMO keeps people buying long after the fundamentals stop making sense. Herd behavior tells us that it’s safer to move with the crowd than to stand alone and risk looking foolish. Overconfidence convinces us that this time, we’re smart enough to get in early and get out before the collapse.

Right now, we may be watching the next act of this recurring drama unfold in the artificial intelligence boom. The rush into AI stocks feels awfully familiar. Companies are racing to sprinkle “AI-powered” into every earnings call. Startups are securing sky-high valuations on little more than promises and buzzwords. Investors are throwing money at anything that claims to be on the cutting edge of machine learning. The technology itself is real, and its potential is massive—but the capital flowing into the space is moving at a pace that feels more speculative than strategic. This is how bubbles always work. They aren’t built on bad ideas. They’re built on good ideas taken too far, too fast, with no patience for the slow, unsexy work of real development and value creation.

And here’s the strange thing about bubbles: even when the warning signs start blinking bright red, people keep buying. Analysts sound alarms. Commentators warn that the numbers don’t add up. Yet the frenzy continues. Why? Because nothing feels lonelier than being cautious while everyone else is getting rich. The phrase “this time is different” becomes a permission slip to ignore history, to wave away the skeptics as out of touch. Optimism sells. Caution gets called fearmongering. When markets are booming, skepticism feels like heresy.

The greater fool theory keeps the carousel spinning: even if you know the price is too high, you bet on the idea that someone else—the greater fool—will be willing to pay even more. And for a while, that’s true. Until it isn’t. Until the buyers run out and the music stops. This is why the idea of the rational market remains one of the most dangerous illusions in economics. Markets are not efficient machines calmly digesting perfect information. They are emotional theaters where perception and storytelling often overpower logic and data. Bubbles and crashes aren’t breakdowns—they are how the system expresses its true nature.

The sooner we stop expecting markets to behave like rational actors, the sooner we can start seeing speculative manias for what they are: human psychology, scaled up and priced in. Because in the end, markets don’t just move on numbers. They move on narratives. And the most dangerous narrative of all is the one that insists, ‘this time, it’s different.’