You can't outsmart a bubble, because there is no smart in bubble.
A bubble will wear you down. It will last so long, and seem so strong, that even skeptics will start to look for reasons. They will see people seemingly getting rich, and the desire to join in gets stronger and stronger.
Even when the bubble pops, people will stay wedded to the illogic.
But the mostly coldly logical guy will come out ahead. The guy who is willing to cut his losses, to sit on the sideline and wait and wait for the bottom, and then buy when the psychology is worst. How many people can do that? Not many.
But I can at least try to sidestep the bubble. By constantly reminding myself that while I can't do anything about the bubble or its bursting, I can try to deal with the consequences. And the best way for that is to take my worst case scenario, and double it. (I have to do that because....despite everything you might think....I'm really an optimist. Optimism being the triumph of hope over experience.)
Rather alarmist sounding, I realize. I'm not saying we should build bomb shelters. I'm just saying, try to imagine a world without the bubble. You're in the bubble, so it's like Sherlock Holmes trying to imagine Arthur Conan Doyle, but try.
And realize its a bubble and has not reason. Don't try to outsmart it.
6 days ago