alt Hacker NewsHave a read of Jeremy Grantham’s book. Seeing bubbles is reasonably easy. Forecasting when they pop and when to get out is very hard. For example GMO as at the end of April were forecasting through the bubble that returns for large US equities would be negative over the next seven years. But since then the market has gone up by over 30%. It could pop any day, or could grow for two more years. Advice is to diversify your investments and make sure you avoid systemic risks. Read books by value investors.
Seeing bubbles is reasonably easy. Forecasting when they pop and when to get out is very hard.
Amen, $SIBLING. Even an idiot like me could see it coming in 2007, triggered by a young coworker asking me about interest-only housing loans. But what do you do about it? I sure didn't know how to short the real estate market, and watch The Big Short to find out how hard it was for them to do it. That, and the ol' "market can stay absolutely fucking bonkers longer than..." chestnut. I would have lost my ass anyway.
But back to the topic at hand, indeed, the timing is very hard. Margin calls and watching the price of a borrowed stock go up and up, those mean that if you have to ask you shouldn't be doing it. Other sibling comments have already said that the answer is a diverse portfolio. As an investor for many decades, I've seen with my own eyes the wisdom of that. Sure, you'll take a loss like everyone else, but unlike everyone else your losses will be smaller. You'll miss out on the big gains that those with good timing will get. You'll also miss out on the absolutely huge losses of those that timed it wrong. Diversify, stay the course, it'll come back: that I've never seen fail after decades of investing. (But for $DEITY's sake, stay away from AI-specific companies if you can do it.)