Part 6/8:
Reflecting on historical trends exposes troubling similarities. The last two-year recovery is the fifth-best statistically, with three out of four of the top performance periods preceding colossal market crashes, including the infamous Wall Street collapse of 1929. The peculiar acceleration in stock evaluations poses a significant risk, as it tends to indicate irrational exuberance—a clear warning sign of a potential downturn.
Despite the awareness of a market bubble, recognizing the optimal moment to sell or hold is inherently difficult. Selling prematurely may lead to missing out on further gains, while holding could expose one to potential losses.