4. A Social Mood Journey Back Through the Housing Bubble

Now that I’ve presented what I believe are the attributes that consistently reflect the self-assured certainty that accompanies market peaks, let’s specifically look at the real estate market and the U.S. housing bubble that topped in 2005.

Although the exponential moves in home builder stocks from 2000 to 2005 suggest that the housing bubble and the dot.com bubble were both similar short-term phenomena, I think it is much more helpful to consider 2000 through 2005 as the culminating “melt up” of a much, much longer bullish cycle in housing that began at the end of the Great Depression.

I offer this distinction because few investors today tend to look at very long cyclical patterns of behavior. ...

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