Wednesday, June 01, 2016

Is This The Most Market Euphoria
Ever Seen In History?
Essay highlights the words of wisdom of Sir John Templeton: "Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.' .. this article suggests we may be at the last stage .. "Not only do investors maintain extremely high allocations to equities today, those allocations are now directed at price-insensitive strategies, which rely on pure faith in the providence of the markets, to the greatest degree in history. To claim this is not ‘euphoric’ behavior, or an expression of intense confidence, is simply to misunderstand the meaning of the word. There are a large number of signs that investors have recently become euphoric, by this definition, and in some respects to the greatest degree we have ever seen. In the spirit of Sir John’s quote, I would suggest this is a very clear warning sign that the bull market has largely run its course. Furthermore, once investors do begin to lose confidence, all of these indicators show the long-term sentiment cycle has a long way to go before investors truly become pessimistic again and a new bull market can be born."
LINK HERE to the essay

2 comments:

Anonymous said...

Templeton never had to contend with interest rates that were so low that they spilled over into negative territory.

If you discount an income stream to perpetuity with a negative interest rate, you get infinity. So lets stop all this clap trap about stocks being clearly over valued. They may indeed be so. However, in todays environment with interest rates so low there is no obvious constraint coming from compound interest theory.

Cliff Küle said...

AGREED You will see that our regular commentary is that people are missing the actual CRASH .. which is the value of money .. it is being turned into trash