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> Are we in a bubble? Yes, clearly, but no one knows when or if it will burst, or how much higher the market can go. One of the key indicators is the Schiller
by camjohnson26 5y ago
> Are we in a bubble?
Yes, clearly, but no one knows when or if it will burst, or how much higher the market can go.
One of the key indicators is the Schiller PE ratio, which compares company stock prices to their profits. It is very high right now: https://www.multpl.com/shiller-pe https://www.multpl.com/shiller-pe
Other good indicators are that inexperienced investors are making a lot of money in meme stocks (AMC, GameStop), and cryptocurrencies or NFTs, classic indicators of a bubble.
Many people agree that the reason this is happening is the US federal reserve has kept interest rates too low for too long. This helps stock and home prices, but can also lead to a bubble. The Fed has indicated that they will raise interest rates soon.
To protect yourself first educate yourself on 2008 and the Dot com bubble, read Irrational Exuberance, All the Devils are Here, or watch Money Power and Wall Street, The Big Short, or Inside the Federal Reserve.
Hedging this bubble is extremely difficult but physical assets are nice to have. Cash is losing value more quickly than normal because of high inflation. As always diversifying is the best way to manage risk. This is not financial advice, just my personal opinion.