Take a look at this excellent paper on market bubbles by Morgan Housel of the Collaborative Fund. You can download the nine page pdf on their website (link below).
• Bubbles are not anomalies or mistakes. They are an unavoidable feature of markets where investors with different goals compete on the same field. They would occur even if everyone was a financial saint.
• Bubbles have less to do with rising valuations and more to do with shrinking time horizons among people playing a different game than you are.
• Protecting yourself as an investor is mostly a function of understanding and acting upon your own time horizon, accepting that other people’s goals are different than your own.