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I recently wrote an article on the topic for Business Insider. Here’s an excerpt:

After the internet bubble, the Federal Reserve came up with a great definition of a bubble. They posited that a bubble is formed when investors, “extrapolate recent price action [or economic action] far into the future.” I believe this is exactly what they are doing today: extrapolating record high profit margins far into the future in order to justify current valuations. And just as Mr. Buffett posited back in 1999, they are likely to be greatly disappointed.

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