SOME BUBBLES FROM THE LAST DECADES

I love George Soros’s quote about why we surprised when burst the bubbles. He said once “The only surprise is that we are always surprised.”

Frankly in each last four decades we have had some kind of bubbles. We have seen few bubbles during those periods.

• 70’s: there was GOLD bubble price gained from 35USD up to 850USD.
• 80’s: Nikkei went up from 8000 to over 40000, before crashing with 80%.
• 90’s: Nasdaq dotcom bubble index went up from 440 to 5000 – 80% loss finally
• 2000’s: Housing bubble in US, Dubai, Spain, Iceland. Gained 200-500% the prices 

The US stock market crashes happened in 1987, 1998, 2000, 2008. The difference between them each time was that these bubbles driven by different stocks, industries. What is the common thing? It is us, the investors, the human beings with our all irrationality, inconsistency and in some case incompetence. Look at the chart below how big is the correlation between three crisis 1929, 2000, 2007. That is shocking how same we act as a herd.

There is no doubt. Bubbles happen again and again thanks to our common greediness. Plus there need 4 other things occur bubbles:

• Strong fundamentals behind the market 
• Optimism about the new age 
• Huge liquidity of cash 
• People start to think this time is different 

We are recreating in each decade a new bubble because we love the hypes. The only problem is that. Most of us don’t make money in bubbles but make a brutal loss. We have to learn how to avoid those losses.

Take a look at our Swiss fund and begin to invest with us!

The BFM Assets Team.