Tuesday, 06 June 2017 00:00

The Bull Market is Completely Rational

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(New York)

There are a lot of worries out there right now that the market is priced irrationally. Many seem to fear that a major correction or bubble-bursting is in store. However, Barron’s is arguing quite the opposite, saying that current pricing is quite rational. The key thing investors need to understand is how political news has always factored in equity markets. Big political headlines have always had less of an effect that boring-but-more-important economic news. The piece draws on others to contend that investors understand that political developments only matter in so much as they undermine companies’ ability to grow, with growth being the ultimate driver of value.

FINSUM: This is a level-headed view painting a picture of a rational investor. While we do not fully espouse that view, it does seem like investors have done a good job tuning out the daily political maelstroms.

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