To paraphrase Sir John Templeton, bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.
In the short-term, markets aren’t about math (though they always revert to it). They are about psychology.
This bull market began in March of 2009. The psychology of the markets was as pessimistic as they had ever been after the real estate crash in 2008.
Ever since then, the markets have been growing on skepticism, and I believe they are now in the stages of maturing on optimism.
While I was getting my hair cut at the barber-shop the other day, the gentleman next to me was telling his barber with the Dow hitting 23,000 maybe he’ll be able to retire someday now.
The barber and no one else chimed in to make a comment about the markets. But this was the first time I’ve heard anyone talking about market levels in the public in a long time—but to the yawn and the indifference of the audience around him.
Therefore, I do believe markets are starting to mature on optimism now that main street is beginning to talk about it optimistically again… but market psychology has hardly elevated to the level of euphoria yet.
It will. And when it does, that is when it’ll be time to be fearful. It’s just not that time yet. At some point, it will be.
Until then, position accordingly. We are.
Chief Investment Officer