The Lesson Learned

This is a nice article by Mr. Zweig who says that bubbles don't do much for investors but have latent benefits for the economy. The one thing I take from this is that the thing to do with any bubble asset (Be it tech stocks, real estate, or bonds perhaps) is to sell it using a systematic, disciplined re-balancing investment process. Simple as that. 

- Christopher

Ten years ago, investors knew that technology would change the world, and they were right. But you can be 100% right about the future and end up with zero to show for it if you overpay in the first place.

When Bubble Burst: Companies Won, Investors Lost

On March 10, 2000, the Nasdaq Composite index closed at a record of 5048.62, up 24% since the beginning of the year, after an 86

% gain in 1999. And many were calling for the Nasdaq to hit 6000 within a year or two.

It closed Tuesday at 2340.68.

What went wrong? Looking back with 20-20 hindsight, you might think that millions of investors had gone insane. Americans in every walk of life—barbers, taxi drivers, waiters, air-traffic controllers—were convinced that they could get rich quick by trading Internet stocks.

Read the full WSJ article "When the Bubble Burst" »