# 'Greed Drives Markets Higher...': Nithin Kamath Warns of Market Euphoria Echoing Historic Crashes
In a timely reminder amid surging global equities and speculative fervor in Indian markets, Zerodha co-founder Nithin Kamath has issued a stark caution about the perils of market euphoria. Drawing parallels to infamous crashes like 1929 and 2008, Kamath emphasized that human greed remains the unchanging force behind every boom-and-bust cycle, regardless of evolving financial tools or regulations. His post on X (formerly Twitter), shared on October 21, 2025, urges investors to heed history to avoid repeating it.
Kamath's reflection comes as Indian benchmarks like the Nifty and Sensex hover near record highs, fueled by retail enthusiasm in smallcaps, themes, and derivatives—pockets that have already drawn scrutiny from regulators like SEBI. With global volatility from U.S. tariffs and geopolitical tensions adding to the mix, his words serve as a sobering counterpoint to the optimism.
### The Timeless Cycle of Greed and Crashes
Kamath broke down the anatomy of market manias in a thread that's resonating with traders and analysts alike. "Greed drives markets higher, euphoria sets in, leverage amplifies gains, regulators tighten, markets crash, fortunes evaporate, and the cycle reaches its end," he wrote. This script, he noted, has played out in every major downturn: the 1907 Panic, the 1929 Wall Street Crash, the 1987 Black Monday, the 2001 Dotcom Bust, and the 2008 Global Financial Crisis.
What makes these events eerily similar? Human behavior. Innovations in instruments—from tulip bulbs in the 1600s to complex derivatives today—change the packaging, but the emotional drivers don't. Kamath highlighted how leverage turns modest gains into perceived windfalls, drawing in more participants until the inevitable unwind. "Greed never disappears," he quipped, underscoring that while regulations have curbed some excesses (like SEBI's recent F&O curbs), they can't erase the psychological pitfalls.
To drive the point home, Kamath recommended *1929* by Andrew Ross Sorkin as essential reading for anyone in stocks, commodities, or crypto. He quoted former U.S. President Herbert Hoover: “The only problem with capitalism is capitalists. They’re too damn greedy.”
### Why This Warning Hits Now
India's retail investor base has exploded over the past four years, with Zerodha alone adding millions of accounts amid the post-COVID rally. Yet, Kamath has long flagged the risks of unchecked euphoria. In April 2025, he warned that a sharp crash could sideline investors for years, much like the post-2008 exodus from mutual funds. Recent data shows retail folks buying dips even during COVID lockdowns or election-day plunges, showcasing resilience—but also potential overconfidence.
With the BSE Sensex dipping from its September peak of 85,000 to around 77,500, Kamath's post amplifies calls for caution. He predicts a plateau in market growth after years of "euphoria," which could temper Zerodha's own expansion but ultimately foster healthier participation.
### Lessons for Investors: Stay Grounded
Kamath isn't bearish—he's pragmatic. His advice? Diversify, manage leverage, and remember that markets reward patience over FOMO (fear of missing out). Historical crashes teach that while recoveries follow, they're painful for the unprepared. As he puts it, the market's "emotional DNA" is fixed; it's up to us to evolve our strategies.
This isn't just Zerodha's founder preaching—it's a call echoed by regulators and historians. In a world of AI-driven trades and meme stocks, Kamath's nod to 1929 reminds us: tech changes, but greed endures.
What do you think—echoes of 1929 today, or just healthy volatility? Drop your take in the comments, and happy (cautious) investing!
*This post is for informational purposes only and not financial advice. Always consult a professional.*
