How to Recognize a Bubble
by Bill McCready of

"Bubbles are invisible to those inside the bubbles" and we have been through one of the biggest economic bubble in history, but none of us saw it because we were inside that bubble. After the "Tech Wreck" of 2000 and other Chaotic Events, you need to be aware of "Bubbles" and the "Stage of the Bubble" in order to get on the right side of the equation and to profit.

Previous Bubbles have included:

The Japanese "Take Over the World" Bubble of the late 1980's

The Asian Currency Bubble of the mid 1990's

The Internet/High Tech Bubble of the late 1990's

The Residential Real Estate Bubble of 2000-2003

The coming Inflationary Bubble caused by the U.S. Government's attempt to mitigate the effects of the crash of these Bubbles and 9/11.

How Bubbles Grow: 12 Easy Steps

1. A believable concept offers a revolutionary and unlimited path to growth.

2. Surplus of funds and lack of opportunities lead to buying or investing in anything available.

3. An idea is complex and cannot be totally explained or related to an investor.

4. The crowd imitates the leader. All Aboard! Even the gardener has a tip!?

5. Prices fluctuate from traditional level to overvalued level, THEN to all new ground and all time highs.

6. New levels are sanctioned by experts. "We are in a new Paradigm!"

7. Fear of missing the boat takes over. Cloning of the idea occurs as many new overvalued competitors enter the market.

8. Lending practices are eased. Money flows like water to anything or anyone with a new idea.

9. Cult figures emerge for the new paradigm. The media promotes lifestyles, not substance.

10. The Bubble lasts longer than expected. Critics are dismissed. The last suckers are sucked in.

11. Fraud emerges as partly responsible for the bubble as the first cracks show in the bubble.

12. Finally, everyone has a reason why it cannot continue. But nobody dumps, and all hold onto their profits. No new buyers. Market stalls.

How a Bubble Bursts

1. A continued new supply of lower priced offerings occurs from rising prices. New IPO's get bigger and bigger

2. There is a rise in interest costs. The Government declares "Excessive Exuberance" and tightens credit too quickly.

3. Prices collapse and everyone heads for the exits at the same time. With no more buyers, prices hit free fall.

4. Fraud is uncovered in many diverse industries, and in monitoring and auditing agencies. This leads to more selling.

5. Governments intervene and give investors time to get out before the real decline.

Rules to Live By

1. Do not extrapolate the future from the present.

2. Trends continue for a long time (2-5 years) and then suddenly reverse chaotically. Witness the Tech Bubble.

3. Intermittent secondary corrections occur at Fibonacci Levels of 38%, 50% and 62% that result in classic Bull or Bear Traps.

4. Bottom picking begins several different times, trying to restart the Bubble, but to no avail. Massive losses occur to professionals trying to manipulate the markets.

5. Finally everyone recognizes that "Trends go further than you expect, and last longer than expected." Everyone gives up and sells.

6. As the volume of the decline decreases, a slow recovery begins.

How to Use this Information

Whenever you are involved in owning, investing or trading anything, review these macro-economic lessons. They may save you TONS of money and make you a TON of money in the long run.

All stocks, commodities, technologies, currencies and real estate are subject to local, national and international Bubble Behavior. Whenever you hear the phrase "you can't lose on this...." Remember to start running the other direction.

Written by Bill McCready of Their Futures Trading Secrets Course offers a complete guide to high probability setups, including live annotated videos that show the trade setups before they occur, so you can learn to trade at the "Right Edge" of the chart. Visit them today.


Privacy Policy: We will NOT share your information with ANYONE
and you can remove your name
from our database at anytime.










Disclaimer and Terms and Conditions © 2003-2017 Soler Investments