Are we in a bubble or is this market permanently changed

97 Replies

Prices keep rising... it's a sellers market... signs of a bubble are pervasive but.. is it a bubble or has the market changed permanently.... thoughts?

@Jessica Wygal -- I definitely don't hope for a bubble, which would mean a pop and crash, but I also definite hope the appreciation slows soon.  This level of price rise is unsustainable -- a normal 3-4% appreciation would be fine.

@Michael Manchester -- Exactly!  A good deal makes sense always.  Period.  To quote Buffett:

  • "Price is what you pay. Value is what you get."

  • "The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage."
  • "I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years."

@Yavuz Bayram -- agreed.  Since I'm on a Buffett tear:

  • "If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes."

It's a bubble due to the fact interest rates are stupid low; interest rates can't remain this low forever. The reason they're so low is because the Federal Reserve is attempting to stimulate the economy, as the economy is weak (and Corona is not to blame - the economy has been pumped up for years). 

When the interest rate goes up (due to inflation due to all this money printing and due to the rising cost of goods) the price of real estate will drop. 

I agree with post above, we are in a bit of a bubble, but the correction won't be major. This will leave a lot of the current valuations in place. Government has propped up the market with unlimited money printing, which will weaken the dollar and we already see that the middle class is getting priced out of purchasing real estate. This will have lasting consequences.