Quote of the Week
“Excellence is never an accident. It represents the wise choice of many alternatives. Choice, not chance, determines your destiny.” –Malika E. Nura
“May we live in interesting times.” A Chinese expression.
Having lived through an Internet bubble, the attacks of 9/11, and the Great Financial Crisis during my career in financial planning, I thought I had seen just about everything. Wrong. I never expected anything as “interesting” as a global pandemic, the worst GDP decline in modern history, mass protests across America, and the sharpest sell-off and the quickest recovery in U.S. stock market history. And it is only June.
But what I see now when I look around, I see the signs of rampant speculation and investing complacency everywhere.
- Bankrupt companies are routinely the highest gainers in the stock market.
- The Put/Call ratio is at an absolutely extreme level near the year lows which is a sign of complacency. This is a ratio of negativity vs enthusiasm or in other words investors are way more positive than negative.
- In the last 10 weeks, every single stock in the S&P 500 is up.
- The smallest and worst companies are doing the best.
- Every taxi cab driver and shoeshine boy has a Robin Hood account and is minting it. A Robin Hood account is an internet account where you can invest as little as $1 to buy partial shares of a company.
- And, every investor is an expert and is doing end zone celebrations due to their trading prowess.
Time will tell how the story ends, but the signs are all there as just before the 1929 market crash (top to bottom down 89%). As Warren Buffet famously said: “In the short run the stock market is a voting machine and in the long run it’s a weighing machine”