How to Recognize a Bubble (for the stock market.... see any similarities?)

[Frozenlock]

http://www.solerinvestments.com/Online-Trading/Stock-Market-Crash.htm

How Bubbles Grow: 12 Easy Steps

1. A believable concept offers a revolutionary and unlimited path to growth.
2. Surplus of funds and lack of opportunities lead to buying or investing in anything available.
3. An idea is complex and cannot be totally explained or related to an investor.
4. The crowd imitates the leader. All Aboard! Even the gardener has a tip!?
5. Prices fluctuate from traditional level to overvalued level, THEN to all new ground and all time highs.
6. New levels are sanctioned by experts. "We are in a new Paradigm!"
7. Fear of missing the boat takes over. Cloning of the idea occurs as many new overvalued competitors enter the market.
8. Lending practices are eased. Money flows like water to anything or anyone with a new idea.
9. Cult figures emerge for the new paradigm. The media promotes lifestyles, not substance.
10. The Bubble lasts longer than expected. Critics are dismissed. The last suckers are sucked in.
11. Fraud emerges as partly responsible for the bubble as the first cracks show in the bubble.
12. Finally, everyone has a reason why it cannot continue. But nobody dumps, and all hold onto their profits. No new buyers. Market stalls.

I found that very interesting.

Some of you might too.

[Ibian]

bitcoin still aint a stock

[I_bitcoin]

http://www.solerinvestments.com/Online-Trading/Stock-Market-Crash.htm

How Bubbles Grow: 12 Easy Steps

1. A believable concept offers a revolutionary and unlimited path to growth.
2. Surplus of funds and lack of opportunities lead to buying or investing in anything available.
3. An idea is complex and cannot be totally explained or related to an investor.
4. The crowd imitates the leader. All Aboard! Even the gardener has a tip!?
5. Prices fluctuate from traditional level to overvalued level, THEN to all new ground and all time highs.
6. New levels are sanctioned by experts. "We are in a new Paradigm!"
7. Fear of missing the boat takes over. Cloning of the idea occurs as many new overvalued competitors enter the market.
8. Lending practices are eased. Money flows like water to anything or anyone with a new idea.
9. Cult figures emerge for the new paradigm. The media promotes lifestyles, not substance.
10. The Bubble lasts longer than expected. Critics are dismissed. The last suckers are sucked in.
11. Fraud emerges as partly responsible for the bubble as the first cracks show in the bubble.
12. Finally, everyone has a reason why it cannot continue. But nobody dumps, and all hold onto their profits. No new buyers. Market stalls.

I found that very interesting.

Some of you might too.

Interesting, Ibian has a point that this is not a stock in the sense that unlimited supplies are available etc...    I think it falls down at least in point 3 and 1.

[BitcoinBarrel]

Bitcoin is not Speculation-proof. Even though it may have value, people can still put unrealistic expectations on Bitcoin.

[I_bitcoin]

Bitcoin is not Speculation-proof. Even though it may have value, people can still put unrealistic expectations on Bitcoin.

+1

[Tirapon]

I think there's a chart knocking about somewhere which shows the anatomy of a bubble...

[seleme]

I think there's a chart knocking about somewhere which shows the anatomy of a bubble...

could you post it please, never saw that one? 

[Ozymandias]

I think there's a chart knocking about somewhere which shows the anatomy of a bubble...

could you post it please, never saw that one? 

Can confirm, never seen the anatomy of a bubble chart on here or reddit.

[I_bitcoin]

I think there's a chart knocking about somewhere which shows the anatomy of a bubble...

could you post it please, never saw that one? 

Can confirm, never seen the anatomy of a bubble chart on here or reddit.

Oh yes, have never seen a bubble anatomy chart..... every day.   

[MAbtc]

Let's all try to post a witty remark about the bubble anatomy chart.

[humanitee]

Are you out Frozen?

[superduh]

because everything that happens happens exactly the same way

[I_bitcoin]

Let's all try to post a witty remark about the bubble anatomy chart.

Fresh out of wit, I am trying though.   Check my post on the godislove thread...   https://bitcointalk.org/index.php?topic=364761.msg3912114#msg3912114

I was laughing the entire time.   No love for the joke on the thread though. Has no one seen fight club?

[theonewhowaskazu]

"7. Fear of missing the boat takes over. Cloning of the idea occurs as many new overvalued competitors enter the market."

This is the one that makes the most logical sense to me. The others that you bolded can be said of pretty much anything.

[TERA]

I used to think that bubbles could be defined by charts that hadn't had corrections to the daily ema to support the price in a while, and the price was just kind of floating up too fast without any support. At $1250 I thought we were definitel'y NOT in the bubble phase yet and that  I was home free because there had already been a strong correction (on Dec 1) and the price was now supported.  Then the whole China thing happened. Due to a lack of support by Chinese buyers, and fear, and exact replication of a bubble pop occurred. It took me completely by surprise. So now I am clueless and back to the drawing board.

[barbs]

http://www.solerinvestments.com/Online-Trading/Stock-Market-Crash.htm

How Bubbles Grow: 12 Easy Steps

1. A believable concept offers a revolutionary and unlimited path to growth.
2. Surplus of funds and lack of opportunities lead to buying or investing in anything available.
3. An idea is complex and cannot be totally explained or related to an investor.
4. The crowd imitates the leader. All Aboard! Even the gardener has a tip!?
5. Prices fluctuate from traditional level to overvalued level, THEN to all new ground and all time highs.
6. New levels are sanctioned by experts. "We are in a new Paradigm!"
7. Fear of missing the boat takes over. Cloning of the idea occurs as many new overvalued competitors enter the market.
8. Lending practices are eased. Money flows like water to anything or anyone with a new idea.
9. Cult figures emerge for the new paradigm. The media promotes lifestyles, not substance.
10. The Bubble lasts longer than expected. Critics are dismissed. The last suckers are sucked in.
11. Fraud emerges as partly responsible for the bubble as the first cracks show in the bubble.
12. Finally, everyone has a reason why it cannot continue. But nobody dumps, and all hold onto their profits. No new buyers. Market stalls.

I found that very interesting.

Some of you might too.

Hi Frozenlock

So ardana is retired now?

Worst

Edit: this guy is a top fud spreader who staunchly said that btc wouldn't see 100$ again this summer. Be careful listening to him.

[piramida]

Saying that bitcoin is a bubble is so 2011. There should be a point in your point list:

13. If it blows but never lower than it was before then raises again then it is no bubble, silly

[RenegadeMind]

Bitcoin is not Speculation-proof. Even though it may have value, people can still put unrealistic expectations on Bitcoin.

True. I keep catching myself being unrealistic in bearishly thinking that it will stay under $1,000,000. Hyperinflation will likely take care of that.

[WompRat]

I will quote this again because it is a good summary.

'Before we relegate a speculative event to the fundamentally inexplicable or bubble category driven by crowd psychology, we should exhaust the reasonable economic explanations. Such explanations are often not easily generated due to the inherent complexity of economic phenomena, but bubble explanations are often clutched as a first and not a last resort. Indeed, “bubble” characterizations should be a last resort because they are non-explanations of events, merely a name that we attach to a financial phenomenon that we have not invested sufficiently in understanding. Invoking crowd psychology—which is always ill defined and unmeasured—turns our explanation to tautology in a self-deluding attempt to say something more than a confession of confusion.' - Garber, Peter M; Famous First Bubbles

I understand the press like to tell the easy story, but we can only truly know a bubble after it has occurred.  For my money the volatility in Bitcoin is very unlike other bubble patterns and may be a good indicator of an explosive technology rather than a bubble.   

[alexeft]

http://www.solerinvestments.com/Online-Trading/Stock-Market-Crash.htm

How Bubbles Grow: 12 Easy Steps

1. A believable concept offers a revolutionary and unlimited path to growth.
2. Surplus of funds and lack of opportunities lead to buying or investing in anything available.
3. An idea is complex and cannot be totally explained or related to an investor.
4. The crowd imitates the leader. All Aboard! Even the gardener has a tip!?
5. Prices fluctuate from traditional level to overvalued level, THEN to all new ground and all time highs.
6. New levels are sanctioned by experts. "We are in a new Paradigm!"
7. Fear of missing the boat takes over. Cloning of the idea occurs as many new overvalued competitors enter the market.
8. Lending practices are eased. Money flows like water to anything or anyone with a new idea.
9. Cult figures emerge for the new paradigm. The media promotes lifestyles, not substance.
10. The Bubble lasts longer than expected. Critics are dismissed. The last suckers are sucked in.
11. Fraud emerges as partly responsible for the bubble as the first cracks show in the bubble.
12. Finally, everyone has a reason why it cannot continue. But nobody dumps, and all hold onto their profits. No new buyers. Market stalls.

I found that very interesting.

Some of you might too.

I still believe in new things although bubbles tend to be created around them, mostly because we behave like sheep and we don't really think. It all boils down to good management of expectations IMHO.

Good article though. Thanks!