“But the truth remains that few ever recognise the early stages of exuberance as attention is typically being diverted the other way.”
Some food for thought from history…
At its peak Japan’s equity market constituted 42 per cent of global market capitalisation and Toyota was making more money from trading derivatives than selling cars.
Shares in the elite Industrial Bank of Japan rose sixteen fold between 1984 and 1989 to a price/earnings ratio of 170 times. It did not matter that IBJ’s free-float was just four per cent – a $130bn market cap ($250bn today’s money) transformed its appetite for risk.
This post was published at Zero Hedge on 11/26/2014.
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