People never change.For thousands of years, people have overreacted. And thousands of years from now, people will still overreact.This manifests in different ways…Riots and wars. Viral “Karen” videos on YouTube. And, in financial markets, bubbles.See, bubbles are a mass overreaction.It takes thousands, even millions of buyers to push prices too far. They each believe they’re justified, that they’ve found a “new paradigm.”Until, inevitably, these bubbles pop — as we’re seeing all around the world right now…
Bubbles Are Popping Everywhere
It can be hard to spot a bubble when you’re in one. But one simple way is to look at fundamentals.In the stock market, a price gain of more than 40% in six months is one sign of a bubble.That’s because fundamentals matter in the long run. They don’t change dramatically in six months or less. When prices get ahead of fundamentals, eventually they fall.Fundamentals include both earnings and an industry’s outlook. New tech, for example, often has amazing prospects. That potential justifies high prices.But earnings must materialize to back it up. Bubbles pop when traders realize earnings aren’t keeping up with expectations.Right now, this is happening all around the world. Since the pandemic, 17 nations have experienced stock market bubbles:
Source: MapChart
(Click here to view larger image.)
This is no surprise, when you consider how governments responded to the pandemic. Many spent freely to ease economic pain. Central banks also responded, leading to unprecedented liquidity.When the lockdowns finally ended, optimism soared.And this optimism, combined with unprecedented liquidity, fueled bubbles in nearly every market.Home prices soared around the world. Rental properties also jumped in value. Then there were commodities. Cryptocurrencies. And, of course, stocks.This may be the first time we’ve seen bubbles in everything — well, almost everything. Price gains in oil and grain were justified by fundamentals and demand shortfall. But even these markets could decline soon, if fundamentals change.As you can see, bubbles have many causes. But they all share the same sad ending…
Bubbles Come and Go — But THIS Changes Everything
Bubbles inevitably end in crashes. That’s what we’re experiencing now, and it’s not pleasant.But it is tradable.See, I’ve been studying bubbles for months. And I kept going back to one in particular.It’s one of history’s biggest bubbles, and it looked like a great trade. But there was always a logistical problem in the way…Until last year, when the Securities and Exchange Commission solved that problem for me. It made a ruling that opened the door to trading history’s biggest bubble.With the logistics problem solved, I got to work…And discovered that trading this ticker returned 43,000% over the last seven years…Outperformed the #1 asset of the decade by 5x…And, most importantly, reduced your risk by 80%.I’ve never seen results like this, and I’ve run hundreds of tests in my career. I knew it was time for a trading revolution. And I’m almost ready to share it with you…Next week, I’m unveiling this asset to the public for the first time. But if you’re eager to know what it is now, go ahead and put your name down here.I’ll tell you right away. But fair warning — it may shock you…
Regards,
Michael Carr, CMT, CFTeEditor, True Options Masters
