This chart will tell you when the next stock market bubble is about to burst

Are stocks in a bubble?

Maybe. Maybe not.

But this chart, from the folks at Evercore ISI — which we saw flagged on Twitter by Nick from economics blog floatingpath.com — is pretty simple: the bubble is about to burst when Sotheby’s stock flies higher.

Sotheby’s runs high-end auctions, and so the read-through here is that “smart people,” which you could also substitute as “wealthy people,” look for ways to sell some of the stuff they have accumulated during boom years right before the top.

Or these folks are looking to get some cash for their expensive stuff as their paper wealth tied up in things like stocks starts to decline. The exact reason, of course, doesn’t really matter: we’re projecting.

But what does seem to happen is that Sotheby’s auction volume and stock performance soars right at the top, only to collapse once the market implodes.

Of course, this could just be another coincident indicator which means nothing. Or everything.

And given where Sotheby’s stock is trading today, it would have to double before you need to get really worried.

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