MICHEL PIREU: There are valuable strategies for surviving and thriving in bubbles
While saving more money is an easy way of reducing risk in markets, shorting is risky
If I was counselling an individual and my purpose was to help that individual, the most important thing would be that you should save more," Nobel economics laureate Robert Shiller has told UK-based financial website This is Money, "because don’t expect that your retirement will follow those trajectories that some advisers are telling you." It’s not a trading tactic, but saving more money is still one of the easiest ways to reduce risk in the markets. Shorting is risky and expensive. Potential losses are infinite and there’s a cost to finance the position. "If betting against bubbles, do it carefully," warns John Authors at the Financial Times. "Note that this means departing from the ‘Invisible Hand’, as fund managers, who make up the vast majority of capital in stock markets, would follow their own interests and not those of the clients whose money they are investing. Hence bubbles can last longer than they did when money was mostly invested by people investing on their own accoun...
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