when things fall apart

I'm fascinated by what's going on in the financial world right now and just exchanged email with a friend who has given me permission to post his thoughts (anonymously). First, some background thanks to MetaFilter: To me, the comments from Malor are especially insightful. For some technical background, see: Now, here are some excerpts of our email conversation. I said, among other things:
I think what's going on with my psychology is that when things are going up, I'm just waiting for the turnaround, and dreading it. When things are going down, I feel better because I'm no longer holding my breath waiting for the crash. ... I wonder what it says about me that I feel better once the pop happens. What about you, are you feeling better or worse now that this pop is happening? How did you feel when the dotcom pop/crash happened?
Here is my friend's reply:
when things fall apart there is a bit of, what's it called, schadenfreude, I think it is. Usually, though when things come apart it pretty quickly becomes scary and painful, even if one really disliked all the dumb-a** stuff on the way up. These big waves, like the dot com thing and now the real estate thing made me feel as though everyone is living in some weird other reality.... it is like the whole run up to the Iraq War too... it's like, "what's happened to reality?" "is everyone mad?" and so on. It's very uncomfortable... and I suppose if it were not, then market waves wouldn't have such power... It's group-think and since we are all social animals it is very hard to resist unless you've been dropped on your head at an early age. I certainly didn't feel happy about the Iraq War outcome, even though I feel I pretty clearly anticipated just how it would go and alas continues to go... and in this crash, I guess I'm glad to see the crazy excess begin to get driven out of the markets and maybe too out of the neighborhood too! but, lots of perfectly nice people get ground up in these things as well, so one can't go around feeling that being a little bit right sometimes is doing anyone much good. But, too, it is easy to just be too pessimistic all the time and so to miss the upside and to really profoundly also to miss what is going on -- so, balance, insight, intuition and so on....
It's nice to have wise friends.

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