Monday, Aug 23, 2010
Forever blowing bubbles
Cnn: 5 investing bubbles
Even after multiple crashes, investors still tend to pile into overheated sectors. Where are the biggest risks today?
Posted by mark @ 10:24 AM (907 views) Add Comment
8 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. Khards said...
Another big bubble they missed - UK farmland prices
![]()
![]()
Farmland is nearing £10,000 per acre. You can easily rent land between £100 to £150 per acre giving you a 1% to 1.5% return.
Farmland has been subjected to 'investors' driving up prices since 2005.
I would like to see more discussions about farmland, it doesn't get mentioned enough.
2. general congreve said...
Everything being equal gold would probably be a classed as a bubble. But when the US govt. and other governments around the world are devaluing their currencies in a race to the bottom, then gold represents safety and wealth protection, not a bubble.
3. str 2007 said...
Well interesting to see a Gold Bubble article, Money Week are still bullish.
It certainly looks like a bubble, but we are in extroardinary times.
4. bleakhouse said...
Blackstone Makes Big Move into Chinese Housing
http://www.cnbc.com/id/38812978
I think they're rather late to that party. So I am going enjoy laughing at them.
5. debtfree said...
The article has flawed analysis, especially regarding the inflation argument.
Why it's worrisome
Inflation isn't rising. It's falling and likely to be restrained for some time by a tepid economy.
Verdict: a major bubble
Gold has already started slipping. It declined 6% in July to a recent $1,160 an ounce. Some economists are warning that continued weakness could lead to deflation. If that happens, expect gold to crater.
Research firm Ibbotson Associates ran a correlation study to determine how closely inflation and gold-price movements track each other. You would expect gold, as a purported commodity, and inflation to move in tandem. The data, going back to 1978 and capturing an inflationary spike, shows a correlation of, at most, 0.08.
That is low. Really low. Perfect correlation is 1; at minus-1, two assets move in perfect opposition. Near 0 implies gold and inflation barely acknowledge one another, and moves in unison are largely happenstance.
You can read more here : http://online.wsj.com/article/SB10001424052748703908704575433670771742884.html?mod=WSJ_hps_sections_personalfinance#printMode
6. estrader said...
As far as I understand, gold isn't an inflation hedge it is a store of purchasing power. Compare the price of Gold to the $US index and it makes more sense. People trust gold, they do not trust Governments and fiat currency.
7. hpwatcher said...
The property bubble - which is the biggest bubble the world has ever seen - is creating a lot of paranoia about other assets, which explains the reason why this article was written.
The whole point about a bubble, is that it takes in a very large proportion of the general public - and to a fever pitch. Only property has done that...gold certainly hasn't - and it's actually up this week. There will be a bubble - sooner of later - but not just yet.
8. str 2007 said...
Yes, incredible how the property bubble machine has soaked up so much future money and really shows little sign of significant correction so far.