The stock market $SPX500 is in a bubble because the Fed is printing money to buy bonds, hence decreasing the yield on bonds and making stocks look more attractive to investors. Does it make sense to just do what the Fed wants us to and buy the bubble?
Usually, when you're investing in a company, whether you're a growth or value investor, you're investing in fundamentals. Some people choose to be traders and will look at technicals. Do whatever works for you. Then we have the speculators, usually investing and trading based not on any fundamentals or technicals. Speculators are the creators of bubbles. They just expect others to pay at a higher price.
When everybody (people who would normally not invest) is talking about investing in something then it is a bubble, it can be anything. In 1637, it was with tulips, In the 1980s it was gold $GOLD , in 2017 it was bitcoin.
Is it better to be in stocks rather than cash if there's going to be inflation? Yes, but not any stocks. The bubble is mostly on the Nasdaq $NSDQ100 . For example, Tesla $TSLA a company which had never had a profitable year is selling at 100 times EBITDA.
If over the long-term the Federal Reserve System has to choose between inflating stock price and lowering inflation, I'm sure they will choose lowering inflation. Politicians don't like inflation. Don't expect the Fed to be always on the side of investors.
Can we predict when a bubble will burst? In 2016, I invested in Bitcoin $BTC at $900. The price reached $19000 before I sold but I failed to sell everything before the market crashed. I made a lot of money but could have made much more if I sold a little earlier. It is impossible to predict the stock market and especially a bubble.
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