It’s A Mistake To Try To Identify Stock Bubbles

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It’s A Mistake To Try To Identify Stock Bubbles

Warren Buffett recently said that, while stock prices are high, he does not believe that prices are today in bubble territory. I don’t think it is possible to say.

When people use the word “bubble,” they are suggesting that prices are about to pop and head downward rapidly. If it were possible to know when that is about to happen, it would be possible to engage in short-term market timing. I don’t think short-term timing works. I think it is possible to say when stocks are overpriced. But I don’t think it is possible to know when a price drop is imminent, or when there is a bubble that is about to pop.

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