If you are planning to make your start in investing, a good thing to measure by is typically the performance of different investment vehicles. With that said, however, it is important to be wary of bubble markets. Everyone remembers when the dot-com bubble burst and investors everywhere saw their portfolios hit the red overnight. Bubbles can be great if you get in at the right time. Here are some investing bubbles that appear to be poised for a major burst.
The first and biggest investing bubble that may soon pop is the gold market. Looking at data from the last 12 years, gold has increased almost 400%. This is certainly outstanding and it is due in large part to fear of market and fiat currency loss, but as the economy rebuilds, the demand for gold is going to rapidly decline. As more people sell, supply goes up, and therefore the price is going to come tumbling down. Investing in gold is no longer the sure thing it was only a year or two ago.
Chinese real estate has also become a popular form of investing as of late, with prices going up almost ten percent in the last year. This increase in price is working to fuel demand as well, which is a clear indicator that the market is indeed a bubble market. Unfortunately, new development is also exceeding the number of available buyers, which means that the bubble will likely be very short lived.
Investing takes a great deal of strategy. Bubbles can pay off if you get out at the right time, but the risk to reward ratio can often be very unfavorable, so exercise caution and do your research before investing.
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