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It's one of the fundamental principles of the stock market: When interest rates go up, stocks go down. And along with financial companies and cyclicals, technology companies - with their sky-high price-to-earnings multiples - should be among the biggest losers in an environment of rising rates.

People often panic when the markets go down and sell off their stocks - but then they aren't in the game when the markets are doing well.

Concentrating wealth in the hands of the few and deregulating financial institutions and practices lead to speculative bubbles that eventually burst - and that brings the whole country down.

What we need to understand is, one, that there are market failures; and two, that there are things like asset bubbles and irrational exuberance. There are periods of booms, bubbles, and manias. These things, if left to themselves, can lead to crashes, to busts, to panics.

When herding behaviour among investors ramps up, a stock's or index's growth rate can increase faster than exponentially, leading to more herding. This positive feedback brings the system to a tipping point. About two-thirds of the time, a crash results.

When people retire, their income drops much more sharply than their consumption. As a result, they stop saving and start drawing down the assets they've acquired during their high-saving years. That could start to put upward pressure on interest rates and downward pressure on stock prices.

If you're saving for the long run, it's actually a good thing when the market is down because the more shares you have, the more you can potentially make when markets rise. And over time - decades, not months - the markets rise more than they fall.

But we have to ask ourselves, what's the purpose of the stock market? It's supposed to be a source of capital for growing business. It's lost that purpose.

It's only when the markets are perceived to have exhausted themselves on the downside that they turn. Trying to prevent them from going down just merely prolongs the agony.

The trend of the market is up, not down. Shorting stocks puts you against that trend and thus makes it more difficult to make money.