Tiny bubbles

After the dot.com bubble burst in the late 90s I had hoped that investors would have digested lessons of what an asset bubble looked like.  But as the years of the 00s ticked themselves off it was obvious that the unconscious greed that permeated your average Joe and Jane Doe-Trader had not been blown out of the system.  Even as early as 2003 at the Davis Funds we were talking about the fact that interest rates were too low and likely creating a bubble in interest rate sensitive industries, like real estate development.  Have we learned vigilance against “irrational exuberance,” as Alan Greenspan once called it?

I feel that the answer is yes, we have learned.  With joy I celebrate the fact that various investing and finance publications routinely try and identify the “next bubble.”  This is very healthy.  Spotting and avoiding a bubble has become a part of a generation of investors’ vernacular and secular process.  Excellent!  For me, this makes me more bullish on the stock market than if the spasms of avarice were still present.

Jason