My Current Take On The Market

I am often asked, “Whaddya think of the market?”

It’s a question that irks me somewhat, because its an short & easy question for someone to ask, but the answer can be long and complicated. “The market” is a large beast and answering this question can be challenging.

But here I go;

What I think of the market is……

The party started at 7pm (at 2009’s index low). Many of us (including myself) didn’t arrive until 8.30pm, as we didn’t want to get there too early, not knowing whether others would arrive, so until then we kept our cash in the bank.

Into the evening, more people turned up to the party and we’re having fun, as the wine is tasting good (we’re making some from our investments) and we are starting to see a few more of our friends show up.

Currently, the clock is near midnight. Many of the desirable girls & boys have already been asked for a dance (the cheap stocks have been bought) but we’re still feeling more confident about our chances and abilities (as we reflect on having a couple years of good returns) and we’re getting a little tipsy.

The party hasn’t finished but we are not sure if it’s going to last until 1am, 3am or 4am.

At this stage, due to overconfidence (feeling drunk), desperation (to get involved in the festivities) or a desire to simply show-off, is when crazy things can happen.

Displaying some of these traits may involve doing cartwheels or handstands, ambitious dance moves, courting the wrong person or inappropriate behaviour.

We think equities remains the best asset class to invest in, when comparing them to real estate, bonds & cash.

But from here on, the actions of markets, securities and many people, is less likely to be based on fundamental sensibility and logic.

It can become euphoric, so just be careful how much you expose yourself.

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