There are many famous speculative bubbles in the past. It currently seems to be a couple. While it may be profitable in order to drive the investment, while forming a bubble, it is important to recognize when an investment is in a bubble, and get out before the bubble bursts. The fact that is of course easier said than done.
One of the earliest bubbles was the famous tulip bulb mania in Holland, which ended 1637th It seems very stupid look back, the seemingly rationalPeople would be more than ten times the average annual salary paid for a single tulip bulb. The bursting of the bubble, as they seem, and the prices came back down to earth. Many people were financially destroyed in the process on the ground.
Another famous South Sea bubble burst in 1720. Shares in the South Sea Company went from just over 100 pounds to nearly 1000 pounds, and then right back to where it all began. This bubble, sounds of almost 300 years ago, not unlikethe gold bubble, less than 30 years. In the mid to late 1970, the price of gold was trading much of the time around the $ 100 level. Then a huge rally gained steam at the end of this decade. The final blow-off with gold around $ 850 per ounce reached occurred. Silver has an even greater advance. When the bubble finally burst into the first two months of the year 1980, there was a rapid decline of the two metals covered with silver, all the way back to the starting price. The gold marketfared somewhat better to start with a share price of around two and a half times the prices at the climax of a 22-year bear market. Gold prices are only now, after 27 years, nearing the previous record price, and although not adjusted for inflation. Silver is still trading less than one third of the price reached in 1980. Not a good long term hold.
Another great bubble was the tech and dot-com mania of the late 1990s. The price for a stock with a "dot com" in their name went on aParabolic price upward move. Many of these stocks had no income, no prospect of profit, no business plan, and only a vague idea for a product. Investors would have far greater to those shares to the market caps, as many established companies with real products and profits. Most of these stocks are now trading on the Pink Sheets for a few cents. This bubble in the level of price increases and the extent of the inevitable fall, far eclipses some of the famous, older bubbles.
And what abouttoday?
Perhaps the most striking and visible bubble is now in Chinese equities. Some will argue that these are real companies with real earnings, with growth rates that justify the high prices. However, there is a mania in China as its citizens line up to brokerage accounts by the tens of thousands every day to open it, buying everything in sight. This is a group of people with little experience to invest. You buy just because prices go up, like many beginners and evenInvestors have experienced during the dot com mania. You will most likely be burned when the pin is the inevitable bubble. The experts who should know better investors always say that "this time it's different." It's never different. The same story is repeated again and again.
Another bubble in the process of bursting the real estate market. Recently, investors have been daily headlines about the thousands of dollars overnight from house mirrors. Condominiums werePre-sold to flippers. People were borrowing on their increasing equity lines of credit more Real Estate Holding AG, or just living beyond their means will bring. Ordinary housing was priced far beyond any person could afford for a salary. If you do not have a house to trade down, establish a trust fund, develop, or an inheritance, you might not be possible to come up with a down payment. People in high paying professional jobs could not qualify for the base starter homein many markets. Plans have been avoided, the deposit requirement and to inform the income reported and verified. This kept the bubble going. Say all brokers in the world: "This time it's different," could not stop the bubble from bursting.
An interesting exception is currently in the Manhattan real estate market. Prices for condominiums and cooperatives in Manhattan are still rising fast as the rest of the province is as prices fall. What ishappened? There are some logical reasons. The city now is that it is desirable to have been cleaned up and made safer. Congestion and travel times are a factor for people to live near, rather than spending it to commute three or four hours a day. But the prices for decent apartments are well beyond the reach of any who have a salary and deal with the financing. This is a problem in many parts of the nation, as already mentioned, but in New York, it is magnified beyond reason. If aDoctor or other highly skilled and highly paid professionals moving to Manhattan and wanted to buy a house for a family, he / she would not be nearly enough money to get a house, let alone be able to save enough for 20% below. If a doctor can not buy a house nearby, where his practice is then I would suggest this area is in a bubble.
If the real estate boom continues in Manhattan, left the only ones able to afford a home are hedge fundsManager, star baseball players, rock stars, actors, or individuals who at great legacies. The city loses its soul and character. I hear so many stories of people who paid $ 200 thousand for an apartment 20 years ago and are now in a position to sell it for about six million. A new building on Central Park West with over 200 units sold with an average selling price of 10 million U.S. dollars apiece. Apartments with a view of the park were more than $ 6000 per square meter. As desirable as large as Manhattan and is theThe price of apartments is in a bubble. It will burst. Those who will pay these prices to get burned when the bubble bursts. So, what can these Bubble Pop? The falling dollar, another bubble in the opposite direction, has foreign purchases of real estate desirable encouraged. The consensus on the dollar is that it will keep falling for the rest of eternity. It can also lower, have introduced or close to it. Any reversal of the dollar could end the demand from foreign buyers. Also, because the hedge fund bonuses are aCause the primary driver of the high-end real estate market, an end to the high fees would be a reduction in demand. Hedge-fund manager fees are also in a bubble, in my opinion, is to be paid as CEO. As a hedge fund manager can justify, with those with high fees as generally poor performance? How can you justify a CEO, with a 200 million U.S. dollars fee for leaving a company, if the price of the stock in the tank?
Another burst bubble, in my opinion, is the art market. As with housing, a portion of theThe driver for the art market is the weak dollar, both from the aspect of art in the United States relatively cheaper for foreign investors, and as a place to be perceived from a Fiat currency into something to contribute. It was a story in the Wall Street Journal today about an actor who is a terrible Warhol painting bought about five years ago for 3.5 million U.S. dollars, and it just sold at auction for 23.5 million U.S. dollars. That's a pretty good return over five years for a work of art thatis questionable long-term attractiveness. It is still the terrible Rothko piece, which sold for 73 million U.S. dollars. If you are not familiar with Rothko, I'll logged He painted large canvases - worth about $ 100 complete, including the stretcher, and put on another $ 20 worth of paint, usually in three blobs that a hamburger in similar to a bun. And somehow, that $ 73 million is worth to someone. I believe that if he painted the first abstract rolls, he could have brought them on the street with theGarbage and nobody would have picked them. If you have a Warhol or Rothko, sell, before the reality in. Feeder
The classic car market is a bubble is well under way, at least in my opinion. It was a big bubble in the late 1980s, in 1960, the exotic sports cars, especially Ferraris. It was a mania for buying argued that the prices paid at auctions and in the seven figures for cars that were purchased for a small fraction of just a few years ago. Many of the more desirableFerraris for more than a hundredfold in a very short time, the shadow of many of the famous bubbles throughout history. What was the reason for this bubble? Many would argue that it was driven by an insatiable appetite of many of the newly rich Japanese. Many of these Ferraris were on the auction bid on behalf of Japanese investors, and the cars were transported vault in Japan, as the population could save gold coins in the safe, although some differences in the size of theBox of course. Many experts suspect the collector car auction rigged many of these auctions, the increased prices. The Japanese investors apparently do not care what they paid for as long as it has brought a car in the tomb. And what is the cause of this new found wealth for the Japanese investors? You may recall that the Japanese stock market was at the peak of its bubble at about the same time. They bought the U.S. landmark buildings. The bubble in their stock market breaks, althoughExperts said it could not, and it has the market for sports cars with him. The Japanese stock market has not yet anywhere near their all-time high, as this is written and maintained. The price for a select few Ferraris now is anywhere near the price in dollars not adjusted for inflation, the peak of about 18 years.
So what has this got to do with a bubble in the vintage market now? The focus has shifted from exotic European sports cars, and much more banalordinary American muscle cars from the mid-60s to early 1970. Very neat and Plymouth Chevy with a muscle car engine is to paint and maybe a few factory options like a racing stripe or another tool that makes the car a bit less than one from the showroom floor would, the prices at auction and get into the six figures. I was amazed watching an auction, where an orange 'cuda (a Plymouth Barracuda) of early 1970s vintage for over $ 300,000 went. This was a car that probablyCosts under $ 4000 new. I would guess five years ago when someone put the key in the ignition and a sign saying "Please, take me," there will no takers. Why is this bubble going on? The classic car experts say it is because the baby boomer men who grew up in the 1960s, not buy for one reason or another in the position that these cars are now in a position to capture their dreams of youth again. It may be something to this. I go to many car shows each year, and see pot bellied men inthe early 60s issued by her Chevelle, Corvette, or 'Cuda. Also, unlike Ferraris were not for these cars so desirable, so long that most have probably been discarded or badly maintained, so clean copies are probably rare. Similar cars from the 30's, 40's, or 50 can not get anywhere near the prices of American muscle cars.
It is very difficult to see the bubble from the inside. It is always clear that a bubble exists when it crashed. Investors inStocks and futures have an advantage because it is easier to put a stop loss to protect against a drop, if there is a parabolic rise. Other investments move with a much slower is the rise and increase in action much more difficult to detect. But if everyone says "this time it's different" and then goes on to explain why the price will never cease to advance, it's usually a good time to quit. If you're in a theater and smell smoke, it's probably wise to get out of seatand get close to the exit. It could be a false alarm. Someone should ask themselves with time on their clock and then set fire to the smell drove past you. You can move back to your seat. But if you wait for proof, smoke and begins to fill the room, someone yells "fire" and everyone rushes for the exits too few, you are always trying to wind up trampled out. It is better to sell when demand is in a mania than upwards, if everyone wants to get out.