Earlier this year, the talk of a stock market bubble has periodically dominated the financial media. Last week, an astute economic reporter even asked President Obama, ?Are you concerned there is a bubble out there like we had in ?01 and ?08?? In my view, these debates are stupid and a distraction for investors as there are no signs yet of a stock market bubble.
During my investing career, I have observed three bubbles, the first being the precious metals boom that ended in early 1980 as gold hit a high of $873, having risen from a low of $113 in August 1976. The gold futures rose 66% in just the first four weeks of January 1980.
It was not only the price action that was consistent with a bubble but it was the public clamor to buy the precious metals. Precious metals sales people had great success in selling coins even when they told potential investors they must act immediately.
The dot.com bubble is the most familiar bubble for most investors. I was attending an investment conference in early 2000 where it reportedly took sixty semi-trucks just to bring in the exhibits for the conference. Attendees were buying everything and not even asking for a receipt.
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