signs of a market bubble?

[rob in cal]

    When the stock market does well, bearish analysts are always talking about a bubble, it seems. I'm wondering what people on this board look for as signs of a market bubble.  Seems to me the p/e ratio is a pretty good one to start with.

[BarkyardBQ]

There is no bubble. http://www.mrmoneymustache.com/2014/08/25/indexview/

[matchewed]

Here is "the mustachian" take on bubbles. Bubbles are short term events, thinking of them as a fear based reaction to something that will happen multiple times in your life is silly. It has been proven that the best mitigation strategy to the worry about bubbles is not to. Keep saving and keep investing, the bubbles will come and go but your money will still be there. Now if a bubble pops what should you do? Keep investing, if you can generate more cash to invest after something has popped kudos to you.

[bacchi]

When the person who styles/cuts your hair starts giving stock tips.

[Kriegsspiel]

When the person who styles/cuts your hair starts giving stock tips.

TRICK ANSWER! Mustachians do their own hair.

[BarkyardBQ]

rob in cal, here's another way I've been explaining bubbles to people recently.

'If you can buy a gallon of gas today, and still have that gas in 10 years, was the high price you paid today too high, or would it seem cheap?'

[RapmasterD]

I don't look for signs of a market bubble.

[hodedofome]

When the person who styles/cuts your hair starts giving stock tips.

That's not a bad way actually. In 2011 when the GLD etf became the biggest etf in the world, I knew that was a bubble. Couple that with the fact that soccer moms were opening up gold buying businesses and you knew this couldn't last.

When grandma starts speculating, the end is near. Who else is left to buy at that point?

[Fallenour]

I often times look for signs of a bubble, but not to sell off, but to buy additional stock than I normally would (buying on discount).

I view the overall initial price as compared to its current price to be my "gains", and then I divide that over time for a very raw "CAGR". Obviously not mathematically sound, but a ballpark.

By buying during a bubble burst, stocks plummet, and start to go on a discount :)

What I do is, is  I tier off my buying, and keeping buying in sets as the stock continues to plummet in value, and I simply record the amount of sets, the number of stock in each set, and the value at which I bought it at.

From there, I know what my actual gains "per set" will be, as compared to an inaccurate "I sold 2,000 shares of X, and made 20 per share". Mine is more like "I have 25 sets of purchases of this stock, ranging from 10-78.6, and I made "x" based on each sets initial purchase point, and CAGR."