Those Dangerous Bubbles

There have been investment bubbles for as long as there's been trading: tulip bulbs, the South Sea Trading Company, technology shares, Internet stocks and so on. The one common denominator is the concept that, with these wonderful and unique opportunities, valuation doesn't matter.

With that in mind, Monday's disaster du jour was Green Mountain Coffee Roasters (GMCR), which plunged about 9.5% to close at $17.82. This is a stock that peaked at $115.98 less than 10 months ago. At that high point, it was valued at almost 50x that moment's expected fiscal 2012 EPS of $2.37. Of course, it was only 38x fiscal 2013 estimates of $3.05, if you believed the good times would keep on rolling....287 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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