Knowing the "when" (i.e. during my lifetime?) is often more important than knowing the "what" (i.e. bubble).
I appreciate the sentiment that it is more important, and nearly impossible to determine,
when a bubble is going to burst. That's something I hadn't fully appreciated prior to this thread.
Nonetheless, I don't think it's impossible to spot one..to spot the 'what'. And I do think that has more value than you all are making it out to be. I think the substance of EMH-type thinking may have overreached its bounds a bit in the responses so far... i.e., sure "you can't beat the market with any sort of stock picking because all information is available information, people are informed and act rationally...and even if you could here and there, you couldn't over the long term because fees"...but to say the same extends to practically everything else seems an exaggeration.
What I mean is I get the impression that each type of marketplace has 'fundamentals'. maybe those fundamentals are unique to it, and if the marketplace is small enough (say a given city and its real estate for 3bd/2ba houses), they could truly give an indication of 'bubble' vs. non bubble. AND you could reasonably choose to enter/forego entering a bubbly market with the intent of value-capture.
I guess it would help to define 'bubble' here, as I don't even hardly know a functional definition of it and it seems some of us disagree as well.
The USD and Euro are bubbles, but they could just keep going for a 100 years without bursting.
That is not how most people define "bubble," and it's a pretty useless definition.
We'll use this one from Investopedia:
A bubble is an economic cycle characterized by rapid escalation of asset prices followed by a contraction. It is created by a surge in asset prices unwarranted by the fundamentals of the asset and driven by exuberant market behavior. When no more investors are willing to buy at the elevated price, a massive selloff occurs, causing the bubble to deflate.
Read more: Bubble
http://www.investopedia.com/terms/b/bubble.asp#ixzz4p5DyZoub If a bubble were to last 100 years, you're all correct and there would be no actionable way really of taking advantage of it in one's lifetime.
But I feel like business and economic cycles indicate that bubbles
won't last that long, and if I'm talking about buying into real estate, I do have an ultra long horizon (basically an infinite horizon for the sake of argument, as I will always need a place to live, as long as I do.)
There's only one time in your life that being in a 'buyer's market' vs. 'a seller's market' really matters, and that's when you haven't yet become either. (and even then, renting (anything) put's you more aligned with the interests of sellers, so you can never really arbitrage on the idea of being a buyer in a buyer's market, or a seller in a seller's market.)