A Funny Thing Happened on the Way to the Stock Market Record
Asset bubbles and the desperate search for profits amid negative rates aren’t laughing matters. Be afraid.
Apologies for being churlish in the holiday season, but the let-nothing-ye-dismay attitude of the financial markets has me worried. The exuberance feels irrational. Asset bubbles form, remember, when greed overwhelms fear. It’s a truism that bad loans are made in good times when lenders relax their standards. As the American economist Hyman Minsky once put it, stability breeds instability.
Investors get edgy when asset prices are down, but they should be more concerned at times like now, when prices have gone up, up, and up. Through Dec. 17 the S&P 500 index has gained 27% this year. The market feels as frothy as the top of a nutmeg cappuccino.