Ep.22 | Navigating Financial Bubbles

“What’s going on with GameStop?” From our mothers to our kids, that’s the question that seems to be on everyone’s mind. Meanwhile, as the numerous players try to figure out how to handle that tricky situation, TV, radio, and newspapers are mentioning bubbles more than ever.

 

So how do you know if we’re in a financial bubble? What triggers them and then causes a bubble to burst? More importantly, how do you protect yourself? Today we’re going through everything an empowered investor needs to know.

On this episode, Marcelo and I talk about why it’s hard to identify a bubble in advance, the role that narratives play in the markets, how bubbles are created, what we can learn from historical bubbles, the impact of apps like Robinhood on the stock market, how you can protect your portfolio, and so much more!

Thank you for listening!

Key Topics:

  • The buzz around GameStop (1:34)
  • Defining a financial bubble (2:28)
  • Why it’s hard to identify a bubble in advance (3:46)
  • Putting the narratives around the market in context (5:19)
  • What are micro-bubbles? (6:51)
  • Rational vs irrational investing (7:58)
  • Comparing current market pricing to the 20-year average P/E ratio (8:37)
  • Stocks that people are currently infatuated with (11:21)
  • How bubbles typically end (13:12)
  • Elements that contribute to bubbles being created (14:34)
  • How fractional shares blur the line between investing and gambling (15:43)
  • The impact of social media on markets (17:08)
  • What we can learn from the first recorded bubble in history (18:27)
  • Areas of the market that are relatively low-priced (22:17)
  • How we structure client portfolios to protect investors (23:03)
  • Why an investment philosophy helps you through uncertainty (23:57)
  • And much more!

Thanks for Listening!

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