The distinction between a stock's speculative and fundamental value is a false dichotomy. The relationship is hierarchical, with the fundamental value creating the speculation which fuels the share price. One can't be removed or factored out from the other. Even Warren Buffet, the master of value investing, invests in stocks with price-to-earning (P/E) ratios far greater than would be acceptable outside of the stock market. While he invests in stocks with low P/E ratios, they are only low relative to the stock market, which has a base layer of speculation.

The more important question for the investor is, "What is a stock's sustainable value? What price level would the stock return to if everybody panicked?" Identifying bust-resistance, panic-proofing, and unflappability is more practical than chasing a stock's actual value, especially now that it appears that bubbles are coming with greater frequency, and in some cases, never popping.

There are two happinesses that come from the pursuit of success. The most visible one is the goal itself. We over-estimate how much joy achieving something will bring, as it ultimately gets reduced to an orgasm.

The other happiness is the journey. When you are jogging towards an object of desire, it creates a sense of liveliness that is the main substance of joyful living. This good feeling represents the lion's share of joy that we can expect to get from success, and yet it's still ignored or sublimated while we salivate at victory.

Within that journey, though, there are peaks and valleys, and there is one peak that rivals the orgasm of victory at the end. It's whenever you pass the milestone that makes it seems like success is at its most imminent. This could happen in the first 10% of the journey or the final 10%. Somewhere along the way the reward goes from out-of-reach to within reach.

This pattern parallels stock speculation: "Buy on the rumor, sell on the news." If everybody knows a company is coming out with a great product, the stock shoots up. On the day of the product's announcement, though, the stock mysteriously goes down. This is because there are no more buyers for the good news once it's already out there. We are always interested in our future success, not our past, and so the fever reaches its highest when our prospects change the quickest, which is somewhere in the middle of a journey, rarely at the beginning or the end.

The radio program This American Life has an episode titled "Wrong Side of History" about a father who steered his daughter away from Bernie Madoff's multi-billion dollar Ponzi scheme. All of the father's hectoring, though, strained their relationship, when the daughter's millionaire in-laws enjoyed Madoff's riches for 15 years.

The father-in-law died early, before Madoff was caught, whereas the other father lived long enough to be vindicated. Had the vindicated father died earlier, would he had enough solace on his deathbed knowing that he championed sound investment principles? Would 15 years of strained family ties have been worth it? What if it was 150 years? How long does an investment have to seem to be doing well for it not to matter that it is fundamentally bad?