One of the first concepts Malkiel brings up in his book, A Random Walk Down Wall Street, is the concept of the economic bubble and the inevitable bubble burst. I distinctly remember reading this section and some of the lessons I got outta of it were:
1. Economic bubbles basically occur when people put too much stock into one thing or one market; this thing and/or market is usually new and exciting and sparks tremendous speculative interest and investment. Note "Tulip Mania" in the 1600s. For more info on bubbles: http://en.wikipedia.org/wiki/Economic_bubble
2. Sometimes it is important for a market bubble to occur; the tech bubble sparked tremendous interest and investment in the Internet, and without it, the Internet wouldn't be what it is today. (Unfortunately for the speculative investors, they're SOL. Remember the market is amoral, it doesn't care that you just lost your entire savings on speculative investment).
And finally, one of the more unrefined points I got out of Random Walk was that people can be very irrational and very stupid when it comes to handling their money. If people think they can make easy money out of simply investing in something without putting in some good hard work in, they usually will give in, no matter how irrational that may seem. Pyramid schemes work for one simple reason people can become very irrational when the opportunity for quick, easy money comes along.
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