CHASING BUBBLES

“ ...time was not passing...it was turning in a circle...” ― Gabriel García Márquez, One Hundred Years of Solitude   It may not be appropriate to use literature as a metaphor for the market, but investors who have stayed in the market long enough will find that all this seems to have happened. Yes, history repeats itself, but each time it's a little different. Wall Street analysts often overlay stock charts of each bubble and find similarities. Figure 7: The index for the 1980s is Standard and Poor's 500. The data for the 1920s is found in the Board of Governors of the Federal Reserve System (1943). Figure 8 :China's two stock bubbles are very pure and the movement patterns are very similar. According to the previous analysis, some guides can be found. 1. Looking for bubbles   Use t he Bubble Triangle  to judge whether the factors that form the bubble are complete, combine with p reviously discussed features. Economic, new tech, finance change, policy & media,...

The famous speculator, a demon in Asians' view, and later philanthropist, George Soros once said that stock market bubbles must be based on reality. As more and more people get involved, it gets crazier than reality can provide, like a party where you just want to call everyone over for a few drinks and talk about philosophy and religion while everyone dances excitedly over the alcohol as a catalyst, it won't stop until someone fell off the balcony, then others realized what they were here for at the beginning. The table below summarizes the details of the tradable bubble: Name Environment Motivation Duration Begin End  Cryptocurrency After 2008, the public distrusted banks and governments Bitcoin promises an anonymous, decentralized system.  U.S. Keeps Interest Rates Low Many times Average of one to two years Cryptocurrencies are traded all over the world, it's hard to say wh...

Just as every coin has two sides, we can not ignore the good side of bubbles. Jacques Oliver (2000) said that bubbles increase the market value of firms, thereby encouraging entrepreneurship, business creation, Invest and growth. John Eatwell (2004) said that the usefulness of the bubble lies in its role in alleviating social inefficiency, which stems from rational individual behaviour. That is, bubbles promote social efficiency. Money is more useful to stay in innovator's balance sheet than in misers bank account. It's time to look to the future. There are some events that may happen in the future that has the potential to be a bubble. Cryptocurrency is accepted by authorities. China sees HK as crypto policy Trial , if finally accepted this will provide marketability for mainland china investors. Financial technology is used in developing countries. There are many countries worried about derivatives as disaster for finance. Such as CFDs , credit default swap, short-selling, a...

Welcome! This blogger is from a developed city in a developing country, so he can use limited funds to explore unlimited speculation in an emerging market. Over the past few years, I've witnessed a lot of bubbles, and people are very good at pumping up prices on unfamiliar things, from imaginary Internet stocks with no real profit, to a certain flavour of wine, to a certain breed of dog from Tibet, and even old tea that tastes dizzy. Figure 1 : Tibetan Mastiff, this may be the most troublesome investment product for speculators. In the classical literature of my country, there is a saying that may explain why everyone is crazy about chasing bubbles. Jostling and joyous, The whole world comes after profit. Racing and rioting, After profit the whole world goes!                                                                 ...