401ktimer1 (33.89)

Where is the next bubble?

September 06, 2011 – Comments (2) | RELATED TICKERS: GLD , SLV , TLT

There is always a bull market somewhere and there is always a bubble somewhere.  

What are the signs of an economic bubble?  Here are a few that come to my mind:

Greater Fool Mentality:  If an asset is purchased only because it can be sold at a higher price, then the asset is likely to be in a bubble. 

Lack of Intrinsic Value: Is there a measurable intrinsic value for the asset.  Can you calculate Net Present Value based on expected future cash flows from the asset if you never sell it?  If you cannot calculate NPV, the asset is really not an asset. 

Media Reports: Usually media reports are contrary indicators.  Justifications such as "this time is different " show up in the media. 

Where is the next bubble?  Here is a concept map to try and identify the next bubble:

Where is the next bubble? Concept Map