The economy is in tatters, yet, somehow, the coronavirus has created a mysterious tailwind that is driving the stock markets higher.
What was looking like a big-time bubble before the coronavirus pandemic is looking again like a big bubble.
Jean-Paul Rodrigue, Ph.D, is an expert on transportation logistics and freight distribution. Those are total dry subjects to most people.
But, he’s notable for a chart he drew in 2008. The chart became famous during the Great Recession because it revealed that 500 years of bubbles, though different, have much in common.
All bubbles blow in stages.
Basically, the smart money gets in first, then institutional investors generate momentum. Things really take off when you and me, the general public, go to market.
Then, of course, all the players’ greed kicks in and we all become delusional about riding the wave of a “new paradigm.” This happens just before the bubbled is stretched to its limit.
What happens next? Well, check out the charts again to see where we go from delusion.
Today, it’s probably a good idea to keep Rodrigue’s chart in mind as the good news stock markets soar above the invisible vapor of the pandemic below.