Small Group Meeting Discussion Question (5)
Small Group Meeting Discussion Question (5). Written on August 22, 2018. Question five: How can we know in advance that a bubble is about to happen? We have said that we do not guarantee we can identify a bubble, nor do we guarantee that we can safely leave the market during one.
Small Group Meeting Discussion Question (5). Written on August 22, 2018
Question five: How can we know in advance that a bubble is about to happen?
Answer:
We have said that we do not guarantee we can identify a bubble, nor do we guarantee that we can safely leave the market during one. But observing and analyzing whether a bubble is forming is one of our most important tasks in the market. We never spend energy on short-term trading or predictions.
The following are several signs of a bubble forming, and they are also the standards we watch when judging whether a bubble is occurring.
Whether the yield curve has inverted.
Whether real interest rates are too high.
Whether there is severe inflation.
Whether stock prices are three to five times higher than value.
Whether banks' short-term CD rates are higher than the Federal discount rate.
Whether the market has nontraditional financing channels.
Whether the market is too highly leveraged, with the risk of a broken funding chain.
Whether investors are overly optimistic and are entering the stock market with borrowed money.
Whether investing has become a mass movement, with your friends and relatives all becoming stock-market experts and stock gods who can recommend stocks to you.
When all of the above signs appear, we should be in the final stage of a bubble. But do not be too nervous. Markets can go crazy, but how crazy the market will become and how far people will go are not things we can predict. In the end, we still need to use the technical-analysis strategy of selling when the three lines turn downward.
Technical analysis absolutely cannot tell us whether a bubble is happening. But when we find that a bubble has already formed and is approaching its end, using technical-analysis sell signals can be a good operating method.
Below is the YouTube video: Investment and Financial Management Essentials (18), Investment Q&A:
Operating strategy, is now a buying point, how to know a bubble, when to sell, are retirement funds enough, 08/21/2018 CLEC Club:
[https://www.youtube.com/watch?v=9fpwcdKV3go](https://l.facebook.com/l.php?
u=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3D9fpwcdKV3go%26fbclid%3DIwZXh0bgNhZW0CMTAAYnJpZBExRG95c2h4dWp2TjR4c0hCbHNydGMGYXBwX2lkEDIyMjAzOTE3ODgyMDA4OTIAAR4MmuqucOUkdFgUEuAFtOmgO_t2xxSmFcpRWrStAgB2qUYFOUyVT-jYJ1Lt7A_aem_OnL6A2KLwA0QjeHTFG5Mrw&h=AT3f-AxlWxAKaGZ4vCin3nx10OQfjpM2d8BUwrr_4m1SbfiSboB0AdLLRo0nmkNt8uKEIzdt0zF6WXgsqs8-e0ksyRf_ndMIsxWAnmvfMmHUBdTiIjt3_6Ns4icQYbPt-xCT4il9vsyfSW1U&tn=-UK-R&c%5b0%5d=AT3eeE2aqqw-JkFge21mkSIM09N5efskbxDUy7AFd57GuNM5Wuk53NRo8MgTmFvX7FdtR5AgRa4P4hZ16woOpWHB19ctOzWhTeJstm6Jps_ufs88sfgytn5GG15GDzclmqNAVAjemAMjdm2koA_KroedLG5xqmkS0Ch8xyIDgWEKaZcIXuR7kmmb8M6Sve4)
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