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Yes probably.
In fact a bubble is developing in the two major asset classes -
property and shares.
The Reserve Bank of Australia has issued warnings of concern. Nevertheless prices keep climbing.
Investors hear only what they want to hear and currently they don't want to hear anything about collapsing prices.
In my experience markets need to be "over bought" for an extended time before real danger presents.
It is of course possible you could buy either property or shares and still make money.
The nature of bubbles is that they take time to form - years in fact. For that reason they may not show up on charts - even monthly charts.
If I was a financial adviser would I advise investors to buy? Many advisers take an "accumulation" - keep always buying as that way buying at the top will be cancelled out by buying in the lows. So no meed to worry for the moment.
You can easily quit shares of course at any time. This is a very liquid market.
Property can require deep discounts to quit quickly and if you have bought in a bad area then a property can be almost impossible to sell in the tough times!!
The "on-costs" of buying and selling property are high. This also contributes to relative illiquidity.
If the market has another two years to run and you wish to buy, you just need to set up a different "risk management" regime.
That is, tighter stop losses and constant spring cleaning. This becomes so very important as we near a top.
Spring cleaning entails selling off stocks that have already made a high and/or have just underperformed.
So by all means buy but take care. Remember there are no flashing lights telling you to sell at the top!
Enjoy the ride
Tom Scollon
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