Any indicators that have worked well historically to predict bubbles? A more simpleton question in a rather nuanced platform- are we in a bubble?
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Current bull run has below characteristic now
- Pockets which are euphoric, damn expensive, hot sector, talk of town, too much money chasing, DCF has accounted for close to minimum 5 years earnings, still valuations look expensive due to too much demand, Defence, railways, Cap Goods, Power, Renew sector, wind, solar, power, PSU. High optimism built on some IT companies working in Defence, Railways, power. Its in buble territory as earnings will start disappointing in next 2 years, earnings will be good but Mr. Market will reject it as price is paid already.
As Great Warren Buffet said, markets are never rational, either stock is trading at fair+ human physio valuation which makes it euphoric or fair - human physio valuation which makes it undervalued than intrinsic valuation.
We have 22 K SIP flows from retail every month, i feel we will see rise in interest rates which will suck out liquidity from markets and move some percentage point to fixed income as stock market return ratios will be poor going forward for an average investor.
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