Chasing bubbles during the last stages of their formation results in a much lower return to risk ratio as it is shown below with examples from bitcoin and Amazon stock.
Venture capitalists understand diminishing returns and usually cash in after an IPO. But many investors and traders are deceived by charts that appear exponential to think that returns also increase exponentially. This is not the case if in the past there were significant corrections because prices start from lower levels and return potential decreases significantly.
More here – The Price Action Lab
