> If this is a bubble, and you know that eventually certain companies behaving this way are gonna tank -- then you can bet right now that way and earn a big payout if that's the case.
"Markets can remain irrational a lot longer than you and I can remain solvent." -- John Maynard Keynes
That is: if you short a stock (leaving aside that you cannot short non-public stock) and it continues to go up you will need to continue adding money to your account to cover your accumulating losses. If it goes up high enough and you don't have enough collateral your position is closed and you are broke.
It is not enough just to identify a bubble you also have to call the top with a reasonably degree of accuracy.
"Markets can remain irrational a lot longer than you and I can remain solvent." -- John Maynard Keynes
That is: if you short a stock (leaving aside that you cannot short non-public stock) and it continues to go up you will need to continue adding money to your account to cover your accumulating losses. If it goes up high enough and you don't have enough collateral your position is closed and you are broke.
It is not enough just to identify a bubble you also have to call the top with a reasonably degree of accuracy.