5 Important Things to Do Before the Market Bubble Bursts

Whichever way it may happen, I just want it to happen already.<p>The recent wave of pyramid schemers and cult-like praise of NFTs&#x2F;smart contracts&#x2F;the holy Web3 is much more insufferable than before. I think that before, it was relatively easy to maneuver around them in the media I consumed. Now, the pyramid scheme has infected literally everywhere I go on the internet, almost as if the only way to avoid cryptocurrency ramblings is to go offline.<p>Please, just burst already, and let the insufferable stop their shilling.

“Don’t be afraid to do nothing.”<p>The author doesn’t mention that his article is the latest in a long line of “bubble’s about to pop” articles that have been steadily written since around 2014. Sure the stock market is in a bubble. But I would be sad if I had spent the last 8 years waiting for it to pop.

I used to think this was definitely a bubble, but I&#x27;ve become less sure after reading about the amount of debt the US has and the ways it can pay it. The easiest way the US can pay its debts is through inflation. Given that, the fed will likely keep printing money. People know this and therefore put their money in things that are safer than cash, which is guaranteed to lose purchasing power over the next decade. At 2% inflation that is something like %10 over 10 years, but at current rates you could lose &gt;50%. This is especially true in assets, which is what people with lots of money want to own. So while the price of food might only go up 10% per year, the price of assets could go up much more than that, and that is not included in CPI calculations. This is like a financial crisis but only for people who don&#x27;t own assets, since they won&#x27;t be able to get into the game. At least in 2008 everyone but the banks suffered, this time it might be everyone but the rich.<p>Of course, I could be completely wrong and I really hope I am because I was saving to buy a house. However this time things are different than previous bubbles because every asset type, even cash, is risky.

&gt; Surveying the landscape, it seems likely that if there is a bubble that it is not in equities but rather in credit. In an environment where low single-digit positive inflation is widely expected by market participants, how can it be rational for “investors” to buy long-term bonds with negative yields? ...<p>It can be rational if investors believe that interest rates are headed even lower. When that happens, bond prices will appreciate still further. There is no limit, technically, to how low long term treasury yields can go. Therefore, there is no upper bound to treasury prices.<p>The thing about bubbles is that at the top few are calling out &quot;bubble.&quot; Instead, every bear whose mind can be changed has thrown in the towel and joined the party. It&#x27;s all about how the old rules don&#x27;t apply anymore. A new paradigm. The only voices of caution are the parma-bears with their tinfoil hats. They will eventually be right, but will have missed booking profits during the entire insane event in the process.

He&#x27;s probably right but the criteria is somewhat wishy washy. E.g.<p>&quot;Belief replaces analysis among many market participants&quot;<p>Many? How many?<p>I am not sure how much analysis there really is in the market. I doubt there is too much with the small investors -- not only is it complicated anyway but companies have too many tricks to pretty up their books. So even if you&#x27;re diligent it&#x27;s a good question if you&#x27;re reading the real data. Most people don&#x27;t have the time to learn that much. As for the big institutions, it&#x27;s not my world, but I doubt there is a total lack of bias. There is obviously a lot of momentum trading.<p>I also became somewhat sceptical if such a thing as a bubble really exists if we can only identify it after the fact, and only under certain conditions. E.g. last year in March the market crashed badly but it recovered quickly and there was no long term problem. Thus it wasn&#x27;t a bubble bursting event. The very same thing could&#x27;ve happened without the &quot;investors&quot; getting confident again, and then everybody would&#x27;ve concluded that covid finally popped the bubble. Both of those can&#x27;t be real.

I don’t disagree with any of this as it is pretty much Finance 101. But what I feel like this sort of analysis tends to lack, is that the markets have always been decoupled from “reality”. The only difference is that, historically, there were less retail investors and more professional traders. These pros shared a consensus reality regarding valuation etc. But at the end of the day, the price of the stock has always been based on the supply and demand of the asset which can have absolutely no connection to the actual performance the underlying company. Think about it, a stock price rises or falls based on people buying and selling the stock. That typically happens when there is news about company performance but there is no direct correlation between company performance and stock price. If we all decided we actually value poor performing companies, their stock price would be through the roof, a la Tesla. It’s all smoke and mirrors, and it always has been.

Definitely an interesting read but I&#x27;m surprised he doesn&#x27;t even approach the notion of asset price inflation being the primary form of inflation from all this money printing that&#x27;s been going on.

Does anyone have a recommendation on what to do with their cash while they&#x27;re waiting to buy shares using dollar cost averaging?<p>Like, let&#x27;s say I have $120, and I plan on buying $10 of stock per month. Is there a good way thing that you can do with the money while it just sits?

My portfolio is cash-heavy these days, but I don&#x27;t believe a crash is coming, I&#x27;m just not comfortable being fully invested at the moment; and I hate that because the cash is losing purchasing power every quarter.<p>I get the feeling that investing in a quality company with a solid balance sheet is the better long term risk proposition because even if it goes nowhere for 10 years, what are the chances that my savings are going to grow in purchasing power? Probably zero.<p>This market has made me more comfortable with risk than I probably should be, but that is another reason why I refuse to go &quot;all in&quot;, to protect me from myself. :D

So if everyone thinks it&#x27;s a bubble stocks must be undervalued? Time to buy? Actually enjoyed the article preamble, the five actual points less so.

The problem is, people have different, mutually-exclusive ideas of what area is going to &quot;pop&quot;. Is it going to be the currency? (in which case you should buy assets), is it going to be assets? (in which case you should buy currency)

This article is so cringey. The author is using Tesla as an example of a bubble stock, for which he is sure Offers no attractive returns in the future. He dismisses a “naïve” student who presents the opposite picture.<p>I will bet anyone $1,000 this author will look like the idiot in 5 years while the student was right all along.

One word: Bitcoin

Use trading algorithms: <a href="https:&#x2F;&#x2F;tradeq.xyz" rel="nofollow">https:&#x2F;&#x2F;tradeq.xyz</a><p>You don&#x27;t know when the bubble will burst, and emotion is usually the driving force.