How to profit safely from economic bubbles

Scientific American, Harper’s Magazine and others have published recently on the economic phenomenon of asset-price hyperinflation, a.k.a. bubbles.

What I want to know is …  Suppose you see an economic bubble that still has legs, but you have no way to predict when it will collapse.  What’s a strategy for safely exploiting the financial madness of crowds that lets you walk away with a nest egg instead of a goose egg when it’s “Game Over”? Predictably, with high confidence.

Also, how important is it to have an exit strategy that lets you pull the plug as soon as you sense the collapse is starting?  A strategy that depends on knowing when to pull the plug or even being able to is unrealistic and doomed, but it also seems like a nice stretch goal to try to design in a parachute, just in case you get the chance to use it and tuck away even more.

There will be another bubble. What’s an algorithm to predictably profit from it?



Tell me (anonymous OK)

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