Part 4/10:

• Risk-Taking Behavior: An increase in speculative activities, including high leverage (borrowing to invest), signals overconfidence and risk appetite that can turn sour.

• Widespread Retail Participation: When everyday investors—your hairdresser or Uber driver—are trading stocks and clamoring for the latest tech gains, it indicates overexposure and herd behavior.

• Unconventional Valuation Methods: For example, judging internet firms by “eyeballs” or user metrics, especially during the dot-com boom, reveals irrational exuberance.

• Leverage and Negative Returns Expectations: Excessive use of debt to buy stocks, with hopes of continued gains, can set the stage for significant losses when the tide turns.