A lack of financial literacy contributes to the susceptibility to market manias from "summary" of A Short History of Financial Euphoria by John Kenneth Galbraith
The notion of financial literacy is of considerable importance in understanding the dynamics of market manias. When individuals lack a basic understanding of financial concepts, they are more likely to fall prey to the irrational exuberance that characterizes speculative frenzies. In the absence of sound financial knowledge, people are unable to critically evaluate the risks and rewards associated with various investment opportunities. This lack of discernment leaves them vulnerable to the allure of quick profits and easy wealth promised by market manias. Moreover, a deficiency in financial literacy hampers individuals' ability to distinguish between genuine investment opportunities and unsustainable bubbles. Without a solid foundation in finan...
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