Remember the days when wealth-building was a simple matter of following the time-honored axiom "buy low, sell high"?

Perhaps it wasn't quite that elemental, but the path toward financial security was at least partially reliant upon speculation. Webster's Dictionary has a relatively narrow definition of the term: "assumption of unusual business risk in hopes of obtaining commensurate gain." Indeed, this definition remains the popularized conception of the word. Whether it be real estate, stocks, commodities or futures, speculators remain individuals who make bets - generally risky ones - in the hopes of large future gains.

Irrational Exuberance

The etymology of the term "irrational exuberance" came from former Federal Reserve Chairman Alan Greenspan during a black-tie speech before the American Enterprise Institute on December 5, 1996. In a seemingly innocuous section of the speech 14 pages in and in reference to the burgeoning stock market, Greenspan posed the following question: "How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?" The rampant tech stock speculation nevertheless continued almost unabated for another 51 months until the NASDAQ peaked at 5,132.52 during intraday trading, before market fundamentals (delayed, but not to be denied) finally took hold. Shortly thereafter, the markets began their precipitous declines, and the dot.com bubble spectacularly burst.

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