Displaying items by tag: greed

(Los Angeles)

PIMCO says there is one really big thing to fear in markets above all else—the lack of fear. The current “melt up” is symptomatic of extreme investor confidence, and that is cause for grave concern, says PIMCO, one of the world’s largest money managers. According to PIMCO, “The fact that the fear is gone is the main reason why we should be worried”, continuing “That means most investors are now pretty fully invested and that means they will want to get out if the markets start to correct -- exacerbating the downdraft”.

FINSUM: We think PIMCO has a great point. The market’s start to this year is pretty insane—it is on track to triple in value in 2018. Is this the final run before a big downturn?

(New York)

If you are sitting on the sidelines, or want to sit on the sidelines but fear missing out on gains, then you may be exactly representative of the market. Bloomberg argues that part of what is fueling the self-perpetuating cycle of market gains right now is what it calls FOMO, or fear of missing out. At present, the fear of missing gains seems to have eclipsed all downside fears, which could be a sign of euphoria, or part of what Wall Street terms a “melt up”. Bloomberg argues that the really scary part of the current melt up is that it doesn’t really have to do with the economy, it is just psychologically driven.

FINSUM: The market is valued so richly that one can’t help but look over their shoulder, but the doom and gloom stories are still getting old. That said, the CAPE ratio (you know, Shiller’s ratio), is the highest it has EVER been (yes, greater than 1929).