Story and Bubble

There is no bubble in equity if info about each equity is transparent. The market mechanism will properly price equity to its fair value. A bubble may be created for an equity if there is something investors are not so certain about it. That is where story plugs into the pricing mechanism. To have a successful investment, one needs to tell what may be the reason (story) to buy an equity. So do you have a story for each purchase of your stocks behind it? Ask yourself and check if your story makes any sense. Talk to your wife or husband first. If she/he does not like the story, forget about your stock. Sell it! Thats why she/he is so important to you.

As what I can see, China is the next story people have many things that are uncertain. How large is the market in China? What may be the potential? etc. So my predication for the next bubble will be equity or anything else that is related to China. That's the reason I am holding stocks that have something to do with China. That's my investment strategies at this point. Hopefully, it is useful for you too.

Let me use an example to illustrate my point. At this point, no one knows what RIMM may report tonight. It creates a lot of uncertainty about tech. That's main reason why tech is weak today. If rimm has a good number and a better outlook, then tech will have a relief rally tomorrow. Otherwise, it will probably destroy the whole rally party.