<P> Speculative economic bubbles are an obvious anomaly , in that the market often appears to be driven by buyers operating on escalating market sentiment / irrational exuberance , who take little notice of underlying value . These bubbles are typically followed by an overreaction of frantic selling , allowing shrewd investors to buy stocks at bargain prices . Rational investors have difficulty profiting by shorting irrational bubbles because , in the words of a famous saying attributed to John Maynard Keynes , `` Markets can stay irrational longer than you can stay solvent . '' Sudden market crashes as happened on Black Monday in 1987 are mysterious from the perspective of efficient markets , but allowed as a rare statistical event under the weak - form of EMH . Benoit Mandelbrot has argued that market bubbles are not anomalous but rather characteristic of price dynamics described by power laws such as Pareto , Zipf or Tracy - Widom combined with persistence in price change trends . </P>
<P> Speculative economic bubbles are an obvious anomaly , in that the market often appears to be driven by buyers operating on escalating market sentiment / irrational exuberance , who take little notice of underlying value . These bubbles are typically followed by an overreaction of frantic selling , allowing shrewd investors to buy stocks at bargain prices . Rational investors have difficulty profiting by shorting irrational bubbles because , in the words of a famous saying attributed to John Maynard Keynes , `` Markets can stay irrational longer than you can stay solvent . '' Sudden market crashes as happened on Black Monday in 1987 are mysterious from the perspective of efficient markets , but allowed as a rare statistical event under the weak - form of EMH . Benoit Mandelbrot has argued that market bubbles are not anomalous but rather characteristic of price dynamics described by power laws such as Pareto , Zipf or Tracy - Widom combined with persistence in price change trends . </P>
who is credited with saying markets can stay irrational longer than you can stay solvent
who is credited with saying markets can stay irrational longer than you can stay solvent
John Maynard Keynes
John Maynard Keynes