When the next bubble and crash comes, would you rather be out six months early, or six months late? Chad Slater, Joint CIO at Morphic Asset Management, says some of the best returns come in the final throws of a bubble.
“At the end of a bubble, the market goes up 14% in the last six months, and it goes down 10% afterwards.”
The big advantage of being late, however, is bubbles are much easier to spot in hindsight. Rates have increased, the market is well off its highs, and the market’s mood has shifted from euphoria to denial.
In the full video below, Slater explains where he thinks we’re at in the current cycle.
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Thanks Chad, always interesting. I'd add that in Australia, the pin that pops equity market 'bubbles' is always external to Australia (think GFC). Limited 'on the ground' familiarity with overseas conditions makes it even more difficult to pick Australian top's.