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The thing is that the nature of speculation is to generate bubbles. Every financial market is a bubble, financial products are always overvalued (relatively to
by dpc59 10y ago
The thing is that the nature of speculation is to generate bubbles. Every financial market is a bubble, financial products are always overvalued (relatively to their current earnings) because people believe they will be worth even more in the future. The real question that needs to be answered is: when will the bubble pop? AFAIK there's no scientific way to answer that question.
- deleted 10y ago[deleted]
- mrep 10y agoYes and no. Speculation creates bubbles when people overestimate but not when they underestimate. Financial products are definitely not always overvalued either. Accounting was created so that we can properly evaluate what a company's overall value discounted for future earnings and they are pretty accurate (accounting was never my favorite subject so that can probably be better defined)