I knew we’d eventually get to this point! As Wall Street’s major indexes continue to rise, fueled by vaccine optimism and stimulus hopes, talk of a stock market bubble has… begun bubbling to the surface again.
Are we in the midst of a bubble?
Yes, I think so. And I’m not the only one.
Recent readings of CNN’s Fear & Greed Index are in the “extreme greed” range. The Fear & Greed Index measures seven indicators:
And looking at last week’s blockbuster IPOs for both Airbnb Inc. (Nasdaq: ABNB) and DoorDash Inc. (NYSE: DASH), we saw them open their first day of trading more than 100% higher than expected. That looks an awful lot like a market that is getting dangerously ahead of its skis.
So that brings us to the next question: How does one invest during a stock market bubble?
So as I said, I think we are in a bubble, certainly when it comes to tech stocks and others that benefited most during the pandemic.
That means risks are rising. It also means we have to be careful as investors and speculators. The potential to lose a lot of money in a short amount of time rises as the bubble is further inflated.
But we also have to be realistic in predicting how and when things will end. Bubbles — real stock market bubbles — can go on far longer than most investors realize. And they can pop far, far faster than you might think.
Check out my short video on how to invest during a stock market bubble and let me explain. Then leave your thoughts in the comments below.
Most people may not know this, but the most important work traders do happens before the market opens…
remarket trading helps investors and speculators develop a plan of action for that day to stay ahead of this crazy and unpredictable market — which I think is a bubble (more on that below).
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