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Financial bubbles cause serious troubles

Jan. 05, 2011 7:38 AM ET
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Real estate market bubble that started in United States of America and spread throughout the world caused a lot of trouble when it exploded. Generally speaking all financial bubbles end in the same way – crisis. Crisis can vary in degree, but it always comes if a bubble is formed. Everything looks nice in the beginning while the bubble is still in formation: stocks are going up, salaries are rising, and businesses are booming and all economy rising.

However, when the bubble explodes all that process is reversed; stocks start going down, or better to say they start collapsing, salaries down, people start losing their jobs, businesses going bankrupt or at least contracting and all economy goes down or even collapses. So, if you know this information you are wise when you see a bubble forming. You make money and you save it. You watch as stocks go up and you look for opportunities to get out of them before market goes against you.

Smart people invest in commodities when they see inflation picking up as they preserve their capital in this way and their wealth increases. Many people just complain when they see prices rising, but if they took time to study the financial market they would be wise and never grumble. They would know how to manage their portfolios and where to put money and when take it out. I know that it is quite difficult to study and then speculate which securities will go which direction, but when you become skillful in that you will be able to notice some serious moves before they happen.

So, financial bubble cause serious troubles, but if you are trained they will not bring you any trouble, but will help you to make some really nice cash. Take time to study various financial markets, do you daily analysis, try to predict where prices will go next and then make some steps to take advantages of what you have noticed in your analysis. If you train yourself to do that, after a few years you will become a professional speculator or even investor. Then, you will never be concerned about any financial bubbles.

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