Quote of the Day: What Makes Balloons Pop?

While today’s selloff may indeed turn out to be yet another buying opportunity during what is, in my view, likely the latter stage of the longest bull market ever, consider the following from James Wetherall’s excellent book The Physics of Wall Street:  

Emphasis mine…

“What makes a balloon pop? In some sense, it’s an external cause: a tree branch or a pin, or perhaps the pressure from your fingers as you hold it. But these very same influences, under most circumstances, have little or no effect on the balloon. The balloon needs to be inflated, or even overinflated, for the external cause to take hold. Moreover, the particular external cause doesn’t much matter—it’s far more important that the balloon be highly inflated when it is pricked. In fact, the external cause of a popped balloon isn’t what makes the balloon pop at all. It’s the internal instability in the balloon’s state that makes it susceptible to an explosive pop.”

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