When bubbles matter and when they don't

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Trying to predict when an investment bubble will burst is a fool's game and it is more important not to jump too soon, says Geoff Legg, investment manager and director at Kennox Asset Management.

For the better part of five years, the market has been characterised by rising prices, rising optimism, complacency and general bullishness, with brief downward movements swiftly corrected by external stimuli in the form of quantitative easing. Are we experiencing a bubble?  For value investors, the question produces ambivalence. In some ways the answer does not matter and in others, it really does. It does not matter because value investing focuses on individual opportunities, not on overall movements of the market. However, on the other hand, it matters very much because opportuniti...

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