Avoiding bubbles isn’t easy
In practice, identifying a bubble ahead of time is often easier than actually avoiding that bubble.
Here, the cautionary tale of Sir Isaac Newton, is a valuable one. Sir Isaac, possibly the smartest man who ever lived, made and lost a fortune during the South Sea bubble in the 18th century. It is a story that all investors should know.
Move slowly and decisively
We recommend that when markets become overpriced – which normally occurs only once or twice a decade – that overpriced assets be sold in their entirety. But very slowly.
This video discusses why we believe assets should be sold gradually over time rather than at first sight of an overpriced market.