A sure sign of a bubble is when the average investor becomes enthralled with speculating in a market which they previously had no experience. The New York Fed examines this phenomena in “Flip This House”: Investor Speculation and the Housing Bubble.
"At the peak of the boom in 2006, over a third of all U.S. home purchase lending was made to people who already owned at least one house. In the four states with the most pronounced housing cycles, the investor share was nearly half—45 percent."
I like to call this the "Uncle Joe" indicator. When your Uncle Joe tells you to invest in Condos, Gold, or Internet Companies; its time to start selling.
This is the personal blog of Emory Redd.
This blog is not investment advice. This is not a solicitation to invest. Don't take candy from strangers.
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