“Sentiment is Frothy”

“Sentiment is Frothy.”

Is that all you got?

“This will end badly.” 

Okay, sure, probably, maybe. But what else?

“Valuations are much higher than they were a year ago.”

Yup. That’s true. So?

Because you could have said “Sentiment is frothy” in the spring of last year after the market had run up 12% into April.

And you could have said “This will end badly” on the heels of QE2 being announced in the summer of 2010. We’re up 100 percent since then and its been more than three years – are we giving that all back? Is that what you meant by “end badly”? Doesn’t every bull market eventually end badly? Can you think one that ended congenially? Is that a reason not to participate in investing for the future? Did you avoid dating because of the risk of heartbreak or a thrown shoe?

And as far as valuations being richer than they were last year…well, you could have said the same in 1984 or 1994 or January of 2012 or 1946. I’m not quite sure how a statement like that can be of any importance other than for the sake of conversation.



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