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Strategies & Market Trends : The Art of Investing -- Ignore unavailable to you. Want to Upgrade?

To: sense who wrote (1606)	3/23/2021 10:03:07 PM
From: Sun Tzu	Read Replies (1) \| Respond to of 10599

Ehmm...they did not criticising another author - they were addressing the repudiation of bubbles put forth by Eugene Fama. Fama is a nobel prize laureate and his specialty is market portfolios - so it is safe to assume he knows what he is talking about. Here is Fama on bubbles: “For bubbles, I want a systematic way of identifying them. It’s a simple proposition. You have to be able to predict that there is some end to it. All the tests people have done trying to do that don’t work. Statistically, people have not come up with ways of identifying bubbles.” -- Eugene F. Fama, June 2016 That a Nobel prize laureate specializing in stock market tells you there is no way to come up with a statistically meaningful way of identifying bubbles should answer your initial statement that I tried to address. It also answers your criticism in that you are assuming there is a way to tell we're in a bubble, and they are telling you that there is none - even when you identify the bubbles a priori. Now you may not like that answer, but I'd hardly call it useless. It gives you the very practical advice of not acting on your belief that you are in a bubble. For the most parts, they confirmed what Fama had said (rather than criticise him). Independent verification is useful in its own right, but they added more. If you read the whole article, you see that they give you clues with regards to age of the industry, the amount of volatility, the issuance of new shares, and slew of other factors. If you decide to play the bubble game, their findings are better than none - but again, they advise against doing so simply because (1) you are unlikely to be able to tell a bubble from a rightly valued transformative growth industry, and (2) even if you could, timing it is so hard that you are more likely to go bust than come out safely.