As A Dog Returns To Its Vomit, Stock Jockeys Return To The Ponzi Stocks

Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. – Sir John Templeton
I’ve always admired John Templeton. Not as the ‘father’ of the modern mutual fund but because I considered him to have been one of the most intelligent thinkers in at least my lifetime (55 years). In 2003 he gave an interview from his retirement ‘perch’ in the Bahamas to one of the financial media organizations. He stated at the time that he would not invest in the U. S. housing market until ‘home prices go down to one-tenth of the highest price homeowners paid.’ Imagine what he would say today…
‘As a dog returneth to his vomit, so a fool returneth to his folly’ (Proverbs 26:11). That proverb is particularly applicable to today’s ‘everything bubble,’ especially stocks and housing. The current en vogue is to compare today’s market to 1987, when the Dow crashed 22.5% in one day. Honestly, I don’t think it matters whether you use 1929, 1987,
2000 or 2007. By just about any conceivable financial metric, the current stock market is the most overvalued, and thereby the most dangerous, in U. S. history. The other ‘vomit’ to which analysts ‘returneth’ are the attempts to explain why today’s extreme valuations are ‘different’ from the extreme overvaluations at previous pre-crash market tops. I find the ‘interest rates are record lows now’ to be the most amusing.

This post was published at Investment Research Dynamics on October 31, 2017.