How To Trade During A Bubble | Rise of Social Investing
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\n\u201cThe Stock Market is a device for transferring money from the impatient to the patient.\u201d Warren Buffet
\nFirst, what is a bubble?
\nA fast increase in asset valuations. Bubbles can happen on a micro or macro level.
\nLast example being the tech bubble
\nLet\u2019s define a short-squeeze
\nInvestopedia describes this way: a short squeeze occurs when a stock or other asset jumps sharply higher, forcing traders who had bet that its price would fall, to buy it in order to forestall even greater losses. Their scramble to buy only adds to the upward pressure on the stock's price.
\nSo, what should you do with this information?
\nGo seeking the next get rich quick move?
\nComb through Reddit and join the party?
\nMe? I\u2019m going to trade as I always have and keep more of my account in cash than I did before.
\nI\u2019m not going to leave the market, there\u2019s still money to be made\u2026
\nBUT, you can only take money from these big wigs so long before you piss them off.
\nIn the stock market, it only takes one large trader to completely flip market conditions. Having a healthy cash balance protects your profits and allows you to take advantage of whatever is to come...while also getting a piece of the action happening now.
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