What Are Signs That An Asset Class Is In A Bubble?

A bubble results from excessive subpriming of risk, with risk having turned uniform, and in asset management specifically exacerbated by its primary focus on distribution rather than risk. This focus on distribution invites ten levels of embedded risk with bottom-heavy diversification (as explained in the video).

Asset management is the poster-child of the musical-chair game of risk escapism, betting on downside risk when it should instead pursue an intelligent pursuit of upside risk, with a portfolio from which to reap best-practices

Asset management has evolved into a bloated practice in need of reinvention, regurgitating an index-of-self that by definition will atrophy, and a stale theory of absolutism incapable of tracing the dynamic nature of assets. Asset management must be overhauled to follow the risk of the investible asset, rather be thrown in a bucket of similar distributions, thereby making its returns more predictable and renewable.

To answer your question specifically, a bloated, excessively fragmented, and complicated financial construct in which risk has become endlessly diversified is the sign and impetus of an impending bubble. Finance bubbles are caused by oversubscriptions of finance to the same distribution thesis without an accurate assessment of the risk within, leading to valuations rising with intrinsic value declining.

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