The Role Of Trend Traders In Creating Bubbles!!!

Discussion in 'Trading' started by BlueStreek, May 21, 2008.

  1. This trading style is definately playing a large role in creating the degree and amount of bubbles in asset classes, it`s occurrence leads to the abundance of mispriced assets and underpriced risk.

    Look at all these bubbles, not healthy for financial markets.

    1) Nasdaq 5000

    2) Real Estate

    3) Private Equity deals 2006-first 5 months 2007.

    4) Credit Derivitaves Market

    5) Crox

    6) Wheat

    7) Uranium

    8) Fertilizer----folks it is horse droppings

    9) AMD

    10) Rice

    11) NG

    12) Oil

    13) Steel

    14) GM---ran that dog from 19 to 36 in 2007

    Nobody can adequately price any asset these days b/c far too many SHEEP TREND TRADERS IN THE MARKET----NOBODY THINKS ANYMORE--they run these things up, play musical chairs, and all run like hell for the exits at the same time!!!
  2. pmg u foreg0t TASR!!!!!!!! the mother of all stocks.
  3. The stockmarket has always been this way. Buying high, selling higher unitl there are only a few left holding the bag. An instrument's value is whatever it is selling for at a moment in time where there is a willing buyer. So why is it now all of a sudden a big problem?
  4. MGJ


    Markets are efficient, "bubbles" are correct prices, "burst bubbles" are also correct prices, and "trends" are illusory formations on price charts that occur by accident during random walks. Nobel Prize winning economists tell us so.
  5. Beanie Babies were an overpriced asset class as well. Get over it. Thank you for your time--
  6. farjeon


    Trend followers may well have been responsible for the bubbles you mention. However can you imagine a world without trends? That would be madness.
  7. Any style used to profit in the Markets relies on a trend of some sort, in varying lengths. Try doing well without a trend... trend in prices, trend in earnings, consumer spending.. etc.
  8. maxpi


    Once a trend gets under way the bigger players HAVE TO jump on the train, what are they going to do with all their client's money, sit on the sidelines and try to explain it to their clients? The more the trend lasts, and if liquidity is there for the biggest players, well then everybody is onboard and you have the makings of a bubble.