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Irrational Exuberance Anyone?

Published on May 7, 2013

Irrational Exuberance Anyone?

May 7, 2013

Markets are making new highs. Day after day. While other mandates may not be so clear, the “wealth effect” mandate is very clear. Do whatever it takes but don’t let S&P stay below this line (see attached chart). I don’t know where is the pause (if at all) but the memories of 2000 and 2007 are resurfacing all over again.

Cheap money or expensive money, whatever it maybe, the fact is S&P is rising and a lot of traders and investors alike have to continue to dance and dance.

However, for retail investors, who are mostly the last to the party, it is good time to review their own portfolios assuming they were “Buy and Hold” investors and have gone through excruciating 2007-2009 ride. Review if your stocks are also equally up as is the broader market. Review what were the mistakes during both 2000 and 2007 periods that you wouldn’t like to repeat. Though hardly anyone can time whether it is a top or bottom, reviewing markets objectively based on time tested valuation parameters can save lot of pain.

Have fun but careful trading, OP

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