Melt-Up, FOMO, and Other Climaxes – A Technical History of Good Times
Many strategists are calling for a year-end melt-up: I believe it already happened There have been 76 melt-ups since 1900: the current one is already the second longest on record Stocks have achieved a Sharpe ratio of 4.5 this past year – better than 99.7% of the times since 1900 There is little sidelines cash and leverage levels are high – A re-allocation from bonds into equities could push the market higher I’d rather bet on higher rates than on a continuation of this over-extended bull run Warren Buffett famously joked that ‘bull markets are like sex. It feels best just before it ends’. Based on my sometimes-unlucky experience of sex and bull markets, I would add another commonality: the climax is sometimes reached before every participant realized that the party had even started.
This post was published at Zero Hedge on Oct 29, 2017.