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A question from LiveCheap reader J E: "I have a $20,000+ loan currently at 17.99% interest rate for 55 months and I am considering refinancing it with a peer-to-peer lender at 11% plus a $500 origination fee for 36 months. The payment on the new loan will be $681 vs $570 on the old loan. I am leery of peer-to-peer lending. I am a nurse with plenty of opportunity for overtime and I plan on at least paying double the payment, if not $800 or more. Can you tell me anything about peer-to-peer lending and whether I can trust them?"

There are many theories about why markets go up and down and become dramatically overvalued or undervalued. There are cycles of greed followed by fear that often explain the huge variations in valuation. Take for instance the recent boom and collosal bust in housing. While academics tried to explain housing price increases based on demographic factors, we all know that the "jump on the bandwagon" factor and greed had  far more to do with it. And only irrational fear can explain why massive government incentives, low interest rates and decade-low prices have failed to stem the decline in housing prices.

Why are so many people who where frozen out of the housing market during the bubble still sitting on the sidelines rather than doing a few logical calculations on the cost of owning versus renting. One theory I like is what's refered to as the "Strong Hands - Weak Hands" view of the market that became popular during the 1930s stock market crash. If you understand the theory, you'll understand why most of the gibberish that you hear on CNBC and other mass media outlets is dead wrong.