irrational markets system

There is an old saying among traders that goes something like this...

The markets can stay l much longer than you can stay solvent.

There is no doubt we have seen some irrational markets in the last decade. First, we have the 1999 Internet stocks bubble, which boggles the mind. Then we have the housing market. And lets not forget the crude oil market where one ridiculous price target after another was being gobbled up by the press. Even worse, many of those prices were reached.

Looking back, it seems obvious that those markets were whipped up in a frenzy of greed and those prices couldn't possible be sustained. After going through events like these, you would think there is no way other bubble markets could be formed again in our lifetime - right?

The fact is that greed blinds many people and causes them to do irrational things. There have always been bubble markets and there always will. Just look how quickly the appetite for investor risk returned as the stock market is up 60-70 percent from its lows. This just happened to occur mere months after our economic system was on the brink of disaster. Can you spot any bubble or irrational markets right now? I wouldn't say any markets are currently in the bubble phase, but they likely will be.

Gold would be my prime candidate for eventually being a bubble market. I have to say the stock market would certainly qualify as an irrational market at this point. I believe gold prices will move much higher in the next couple years, but a target price is almost out of the question. The point I'm trying to make is that these types of irrational markets tend to move much higher than most people would expect. Therefore, it can be very costly to fight them.