In a yesterday blog post I highlighted a Bloomberg interview with the head of a venture capital firm that got me reminiscing on personal observations of bubbles past. Having cut my teeth back in the 80s, I’ve had the good fortune (sincerely) of being professionally intimate with the ’87 crash, and every recession, every bubble, every bursting, every bear market, every currency crisis, and every etcetera since.
And while every episode possessed its idiosyncrasies, virtually all of them shared one characteristic; which is captured in this famous, and timeless, Warren Buffet quote:
“I get fearful when everyone else is greedy and greedy when everyone else is fearful.”
Sir John Templeton’s famous saying has been equally prescient since the day he uttered it:
“Bull markets are born on pessimism, grow skepticism, mature on optimism and die on euphoria.”
Now, having said the above, I recognize that multiple times throughout this current, longest-ever bull market, many, if not all, of the components in our Fear and Greed Index were exhibiting high levels of greed and euphoria, and I wasn’t sounding the alarms then. Why? Because general conditions during those periods didn’t compel me to, like they do now, as I illustrated in the video below.
Have a great weekend!
P.s. While I’m absolutely not recommending that you bet serious money against this stimulus, emotion, and, alas, debt-fueled rally, our Fear and Greed Index scored +91 (high “greed”) today; +100 is as high as she goes.