It is impossible to predict when exactly the financial bubble will burst. But it is possible to spot the very fact of formation of such a bubble.

Let’s check whether there are signs of a bubble forming in the stock market of Amazon or PayPal. …it was very difficult to definitively identify a bubble until after the fact: that is, when its bursting confirmed its existence…

(Alan Greenspan, 2002) Saxo Bank has recently published its outlook “HOW TO SPOT A BUBBLE”, which describes the methodology of identifying bubbles in the financial markets. In my opinion, the approach is really interesting because it is simple and logical.

And in order to practice it, let’s apply it to Amazon (NASDAQ:AMZN) and PayPal (NASDAQ:PYPL). Let me explain briefly the essence of the method on the example of Bitcoin because hardly anyone now doubts that it was a classic bubble.

Setting aside the theoretical reflections on the nature of the processes in the world, according to Saxo Bank “… a bubble may be characterized by super-exponential behavior where the growth rate continually increases…”. Read more from seekingalpha.com…

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