Why We Love to Call Everything a Bubble

It’s not always easy to understand why assets get expensive, but that doesn’t mean every risk in the market is about to pop

Bloomberg Businessweek
Bloomberg Businessweek

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Illustration: Eva Cremers for Bloomberg Businessweek

By Joe Weisenthal

Dear investors,

I wanted to give you an update and share some good news: The Bubble Opportunity Hedge Fund is up more than 22% this year thanks to our significant holdings of long-term government bonds, Bitcoin, and urban real estate.

Alright, I don’t really run a hedge fund. But back in 2017, I did joke on Twitter that someone should create a portfolio consisting solely of assets that pundits love to warn are in a bubble. The premise was that people always call things that have gone up a lot a bubble, and most of the time those calls are wrong (or at least very premature), so it makes sense to buy them all as a basket.

Paul McNamara, who runs an actual nonpretend hedge fund at GAM, went ahead and constructed a hypothetical bubble portfolio a few days later, consisting of things such as Netflix, Tencent Holdings, Tesla, a Canadian apartment REIT, a London property company, the Grayscale Bitcoin Trust, the Argentine century bond, Japanese government bonds, long-term zero-coupon U.S. Treasuries, and so forth — you know, all the things people have been…

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