As Melbourne begins to re-open, having endured the world's longest lockdowns, the stock market has also just gotten through what is historically one of the most volatile periods of the year (Q3), and now we're on the final stretch home - I think I can hear sleigh bells in the distance. Could Santa Claus have arrived a little early this year? It looks like it.

The price of land was soaring. The cost of cotton and slaves rose sharply. Speculative lending standards and a land bubble of the edge of bursting forced interest rates to rise around the world, and crisis followed the economic expansion of 1834 and 1836. After a brief recovery from 1838 to 1839, it wasn't until 1843 following a gold rush, that the economy was booming again by 1850.

In the world of finance, the only free lunch is diversification - so they say. Well, so says famous economist and Nobel Prize winner, Harry Markowitz. The concept that by mixing a number of different investments will, on average, and over the long-term, yield higher returns while reducing the risk. In other words, don't put all your eggs in one basket. The strategy has been used for as long as investing has been around, it's as old as the hills.

The project looks like the set of a horror film. Half-finished apartments blocks stand empty and abandoned. Following the credit crisis of 2008, China was booming. And everyone wanted a part of it. Fast forward 10 years, and we're now witnessing what happens when you drive really fast down a windy road.

I randomly dish out investment lessons to my 7 year old. Yesterday I was explaining the concept of revenue and costs. I started off with a simple one. I asked him, if you made $1,000 in revenue and you spent $400 in costs, how much profit do you have left? $600 he responded. I went on, if you made $1,000 in revenue and you spent $5,000 costs, how much profit do you have left? He looked at me. Puzzled. His eyebrows pinched inward. And he burst out laughing. You have no money he responded. Clearly he has not heard of Uber, Tesla (until recently), Snap, AirBnB, Slack, and so on. His response was totally logical. And it is the same response many investors today give.

What did the number 0 say to the number 8? Nice belt. Ha! Lock down life and kids jokes. But it did get me thinking. With cash rates at near zero, bond yields at record lows, investors continue to be pushed into directions they may not have gone before. It also creates bubbles in all sorts of places - unintended consequences.