Sorry for taking so long to speak up. I've been traveling around this week, buying up empty condos in Palm Beach and Beverly Hills. Just kidding.

Dan is right. Bubbles do have benefits after the fact, much as the third owner of a hotel (or Iridium) can make money if they buy it cheap enough. Plus his book is fun to read, which separates it from most of the dry biz drool out there.

Still, what I'm intrigued by is why they form and therefore how to beat the saps that inflate these things.

Usually, you can find some often tiny piece of interference in what should have been a free market. Something that sticks when it should slide. Some piece of legislation that introduces a blow hole. South Sea had a government mandate for trade. Railroads had right of ways. Telecom companies were driven by Reed Hundt's short-sighted, written by lobbyists, a compromise to nothing, who in their right mind would have come up with this piece of legislation known as the Telecom Reform Act of 1996 - more like Reform School. A Pop! T-shirt for the first to identify the subprime stickiness.

Things then get mispriced. Happens all the time. There were returns that would not be there in a free market. Capital chases these returns. So far, that's OK. Usually, someone notices the mispricing and corrects it. But sometimes, the psychos take over.

Those that don't understand how stock markets work (just about everyone, including most of Wall Street and yeah, me too more often then I'd like) mistakes a stock going up as a reason to buy. Momentum junkies. Momos. These are the suckers blowing hot air into bubbles. Entire mutual funds are card carrying momos. They mistake investment returns for return on investment (in a business). Time horizons change to rationalize high stock prices. Sock puppets of the world unite. Bad move.

To Dan's central point, all of this infrastructure would have been built anyway with returns spread over a decade or two instead of 18 months. But dopey emotional human beings who make capitalism work in the first place misprice and miss tops.

The lesson: be early, sell often and make sure you have a big enough broom to sweep up the valuable debris afterwards. Like those condos.