Kevin Duffy of Bearing Asset Management has a column on Lew Rockwell's site laying out lots and lots of example of, uhm, irrational exuberance about the market. It’s not so much the optimism that’s making him nervous but about the ubiquity of the optimism.
Never confuse a stampeding herd with the facts. Only in a bubble can the majority – utterly intolerant of dissent – delude itself into believing it is in the dissenting minority. We’re not sure whether such behavior is disingenuous or simply dysfunctional. Perhaps the old saw applies: "When everyone is thinking alike, no one is really thinking."
Sell Dow 12,000 [LewRockwell.com]
Posted by beanspants1, Nov 06, 2006 11:28PM
next time someone says to you, "When everyone is thinking alike, no one is really thinking," ask 'em what they think about slavery.
then accuse them of not thinking when you suggest they should be your slave, and watch their head explode, and then right before the explosion they will see, that perhaps, sometimes when everyone thinks the same thing, its because we've made some correct decisions.
Not saying that applies to the DOW @ 13,000 exactly, just that when people start pulling out quasi-syllogisms to seem deep, then maybe the facts aren't leaning in their favor.
SEE:
The investing public is all in. Equities account for 35.6% of household financial assets compared to the long-term average of 26.5% (since 1952). Money market fund balances are near an all-time low 21.3% of mutual fund assets (see graph).
But anyways, this stat alone shows a degree of silliness. Money market funds are at an all time low (odd that his graph doesn't go back to 1952, but rather 1983) is beacuse the stock market is up 12+% in the past year while the MM rate is around 4%. The spread on that is outrageous == pulling your money out and then going back to a MM account can be done if you fall from 12% to 6% even considering the tax you would have to pay.
it shows that investors have alot of spread to ride, so there's no need to make any itchy trigger finger calls until we see more than a 100 point drop in the DOW. if earnings & unemployment were ugly, then i'd probably be more inclined to agree, but as it is? No way, let it ride.