How to Spot an Investment Bubble Before It Pops
Rapidly rising asset prices + increased positive media coverage is the swamp in which bubbles form
To many, investing has become synonymous with gambling.
They see it as a game, with a chance of winning big or losing it all. Of course, that’s not what investing is at all.
Real investors understand they are taking on risk, but they never put themselves in a position where they can “lose it all.” Real investors also have realistic expectations; they do not expect to get rich overnight through investing.
The difference comes down to investing vs. speculating.
Investing= buying an asset based on the underlying fundamentals like the earnings of a company.
Speculating= buying an asset based on the narrative (hype) surrounding the asset.