Thursday, August 26, 2010

Investing Bubbles & The Media

Fortune recently highlighted what they view as six separate investing bubbles in the making, including the Chinese economy, gold and U.S. Treasury bonds. All of the talk of bubbles can be particularly scary since the bursting of the housing bubble has been one of the primary causes of "The Great Recession" we're currently in.

While I don't have an official position on each of the bubbles Fortune lists, I do think that any time the euphoria and enthusiasm for a particular investment officially gets "called out" by the financial press, it may be time for a reconsideration of whether or not those investments are fairly valued. After all, you normally see the media write glowing stories about assets as they inflate, inflate, inflate until their bubbles burst. When the financial press begins looking at things more closely and pointing out the inflated valuations of those assets, the end of the run may be near. Caveat emptor!

No comments:

Post a Comment