‘Markets make opinions,’ goes the old Wall Street adage. Indeed, this sounds like a nifty thing to say. But what does it really mean?
Perhaps this means that after a long period of rising stocks prices otherwise intelligent people conceive of clever explanations for why the good times will carry on. Moreover, if the market goes up for long enough, the opinions become so engrained they seek to explain why stock prices will go up forever.
After nine years of near uninterrupted stock market gains, new opinions are being offered to explain why the stock market will be bathed in sunshine indefinitely.
For example, the late-1990s term Goldilocks is again being used to describe why the slow growth, low unemployment, economy is good for stocks. Apparently, if an economy is not-too-cold, but not-too-hot, stocks can go up lots and lots.
What’s more, these days everything is so perfect that Goldilocks is no longer a good enough descriptor. This was the conclusion that JPMorgan’s Jan Loeys recently reached, no doubt after peering at a 5-year S&P 500 index chart:
This post was published at Zero Hedge on Aug 11, 2017.