The Exuberance is Contained
Courtesy of Howard Lindzon
I’m always optimistic, but I am pretty bullish right now.
On Stocktwits, people are always bullish but there is a good reason. The community was started by moi and grew in 2009 and 2010 post financial crisis. It grew fastest again starting March 2020 as the crash ended and money came down from the green printer in the sky.
I say bullish quietly here on the blog only because I don’t want to upset all the smart bears with their charts and ‘market factoids’ on Twitter and CNBCQ.
If you look at this chart you can’t help but get a little nervous:
I look at it and see government printing and zero int rates in bonds and would say NO WONDER. At the hint of bad news for the markets now, the government steps in ease our pain.
Biden pushed the ‘cliff’ for student loans restarting back to January which he says is ‘one last time’. It is not just the old people getting the financial love right now.
As Charlie points out:
The unintended consequences have been set in motion and have rocket fuel.
Even ‘pigs‘ (banks) have proven they can fly when conditions are this loose:
BUT,
The last 10 years have not been great for everyone. Take a look at all the asset classes and things do not look so crazy:
There is no ‘exuberance’ for people over 50…mostly rage.
There is no ‘exuberance’ from the people that started investing in March 2020, they just think stocks go up and are tired of people telling them they don’t know what they are doing.
As for tech stocks, they are rich by multiple but that has been mostly the case forever.
Have I mentioned binds are yielding zilch and nobody under 40 plans on buying one ever or again.
I think the exuberance is contained to a certain set of ‘start ups’ which according to the media is any private company (they still call Uber and Tik Tok startups).
The startups I speak of are digital and mobile and native and cultural (NFT’s for example and tokenization) and I think there is good reason for that exuberance. It is still early. The products are fun and getting better and more useful, the people making them are talented and the companies are pretty capital efficient.
If the old financial world does not get its way and connect the digital financial world completely to their old financial markets, the after party mess will be contained.
In the meantime, I am ok with letting the older folks have the banks and S&P going higher. They can’t seem to enjoy it.
