Source: Yahoo Finance

Category: Media, Video

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

11 Responses to “Why Bubble Talk Is Just a Bunch of Hot Air”

  1. chartist says:

    I have said on this forum, probably more than once, that I have no faith in bubbles that people claim to see.

  2. rd says:

    In the “Better Late Than Never” award category:

    Who needs bubbles when you can lose 63% during a bull market for stocks and bonds?

  3. zell says:

    Rounding up the usual suspects again: gold, bubblers, and bears.

    Maybe the reason people are seeing bubbles everywhere is that they are looking at the bottom of the pot where they are generated. Why look there. Because heat has been steadily applied to the pot, for an increasingly long period of time. You see bubbles before you see simmer. Then bubbles again as they burst on the surface.

    The unidirectional action of the market is a clue and the fall in gold fits in, as it indicates the increasing comfort with stimulative policies, which scared many at first.

    What would Mandelbrot say?

  4. Ponchovilla says:

    The largest air mass of hot air is inside the Beltway, DC that is. There have been no bubbles seen there in years unless you count the escort service workers in the hut tub with the regulars you can see on CSpan.

  5. cowboyinthejungle says:

    I generally agree that this might be a good contrarian indicator. That said, I do have a question to pose…

    If this is the “most hated rally” vs. previous bull markets, does it stand to reason that the top may look different, as well? Could the top be more hated, too? i.e. Instead of the “irrational exuberance” we expect to see in a bubble, could we see “irrational complacency” instead?

  6. dctodd27 says:

    I like the guys over at GMO. They seem to have a good handle on what kinds of returns to expect from the market. Let’s assume they are close when they say US Large Caps are in for -1.3% real for the next seven years, and US Small caps are in for -4% real over the same time frame. How low do those numbers have to get before we are officially in “bubble” territory? Does it even matter?

  7. BuildingCom says:

    Certainly not labor wages.

    So the question is;

    Do you really believe wages are going to double or triple to meet massively inflated prices?

    Of course not…. Bubble prices will fall by half or more to meet wages.

  8. zell says:

    I expect you are right. It feels wrong, though. I didn’t mean to cast any doubt on your work. I forget that this is connected to your work…I’m not in the game. Can’t remember if I used to sail out of Manhasset Bay or Hempstead harbor. I think Manhasset Bay- Sigsbees was the name of the place- hard to forget that. Happy Holidays! Keep releasing those lady bugs.

  9. [...] Video: Bubble Talk is a Lot of Hot Air According to Ritholtz [...]

  10. amonroe999 says:

    We are not only in uncharted territory, but it is increasingly clear that both information and the markets are being manipulated. It is thus very hard to use traditional analysis. I am surprised that we haven’t already crashed (and have been saying so for some time now). However, there are some things that cannot be argued:

    We have vastly more debt than we can ever pay off in current dollars.
    We have exceptionally low interest rates and have really no tolerance for higher “normal” rates.
    The idea that we can finance the government forever by having the Fed print money is akin to believing that the earth is flat.
    If we really have too much debt, then the answer cannot be to accumulate more debt.
    The European and Japanese economies are in worse shape than we are and if and when they blow up so do we.
    Ditto for the European banking system which is vastly overleveraged with bad loans and sovereign debt that has an infinite multiplier as it consumes no capital.

    There’s more, but the above should be enough. I will only add that while we are in “uncharted territory”, the underlying scheme has been tried many times since the beginning of financial history and has never worked.