Reckless spending: will it all go pop? (Is The Bull Market Coming To An End?)

Telegraph UK ^ | 20 February 2007 | Edmund Conway, Economics Editor

[shrinkermd]

Levels of greed and hunger for risk in world markets have soared off the scale, according to stark research which warns of an impending slump.

The alert tempered news that the FTSE 100 index of leading UK shares has hit a new six-year high, while the FTSE 250 has soared to a fresh peak.

Dresdner Kleinwort said its fear and greed index - a measure of the global market's appetite for risk - had just hit an all-time high.... The research is the latest evidence that markets may have become over-complacent about the possibility that their assets are overvalued or that the economy takes a turn for the worse.

Market sentiment has been boosted in recent months by, among other things, signs that the US housing market may have avoided a hard landing and that the economies in Europe and Japan are once again booming.

However...

...

[shrinkermd]

Another gloomcasting article by from the UK Telegraph. Easy to discount as a bad weather forecast, but sometimes the weather man is right.

[MNJohnnie]

L'audace, l'audace, toujours l'audace


The cowardly and the meek do not achieve greatness. Or in simpler terms, nothing ventured, nothing gained

[D.P.Roberts]

http://www.kipling.org.uk/poems_copybook.htm

[The_Victor]

I miss Willie Green.

[Sterlis]

I'd like to know what "risky assets" mean to this guy. This is a pretty vague article. Very few facts. A "Fear and Greed Index?" How is that derived? What does he think moves the markets anyway?

A specific that comes to mind is that of the Chinese exchange. It is way out of control in the uniform gross over valuation of stocks and a bubble has formed that must correct itself and it will be a bloodbath when it does.

I'm an active investor and fully understand the meaning and the implications of the word risk but since Al Gore and the Dem's beat the word "risky" to death in the 2000 elections I cringe when I hear either in the media.

There is a class of person now that uses "risky" in the same manner as the Knights that say "Nee".

Nee Nee Nee Risky Risky Risky. Just be afraid - very afraid!

[Bommer]

HOW COULD IT???? THE DEMOCRAPS JUST TOOK OVER?????

[PSYCHO-FREEP]

Democrats do this to convince people how badly they behave without their superior guidance.

Last year, the housing market was supposed to crash and take the economy with it; Due to high fuel prices, low consumer confidence, weak dollar, etc,,,.

This article is another Leftist "Global Gore Apocalypse" wishful thinking. Hurry, have them save us!

[Williams]

I hope the market doubles and triples, but reality is that markets correct, drop, crash. Further reality is that happens when they are overvalued because everyone has decided they will keep rising. As they say, when the last bear becomes a bull, the market is ready for its crash.

The market can only sustain rises based on real increased values. Once it becomes a bubble, it will burst.

[sergeantdave]

Feed the info into Goracle's Magic Globull Warming computer. Whatever answer comes out the other end, do the opposite.

[Eagles Talon IV]

"The research is the latest evidence that markets may have become over-complacent about the possibility that their assets are overvalued or...".

IMO a stock is overvalued if it is selling at an extreme premium to earnings. I can't speak for the FTSE but I believe the S&P is currently trading at about 16X forward projected earnings. This is not high and barring something unexpected it portends continued growth ahead.

[Republic Rocker]

16x's is healthy...... if you really believe this world market is going to slow then short the market or get out.... but at the rate it is growing I am fully invested.

[Eagles Talon IV]

"...but at the rate it is growing I am fully invested."

As am I although at my age it is conservative with a 55-45 mix (equities vs bonds and cash).

[Forgiven_Sinner]

"As am I although at my age it is conservative with a 55-45 mix (equities vs bonds and cash)."

At 51, I must be very aggressive, since I am 95% in stocks and 5% in bonds. However, I diversify through index funds (45% in Russel 3000) and international mutual funds (25%).

I have averaged over 20% annual return since 2003.

I'll pull back my horns when I think the economy will go south in the next year. I don't see a down turn until 2009 at the earliest.

[Eagles Talon IV]

Many years ago I decided to totally fore go individual stocks for mutual funds. I have been very happy to date and have no problem paying the .5% management fee most of my funds charge. It is well worth the money to have qualified money managers make decisions when and what to buy and sell.

Mostly I am in mid and large cap balanced funds with one fairly healthy position in a low priced stock fund which has done very well (closed to new investors). My favorite is the Dodge & Cox balanced fund. Amazingly this fund has been around since 1931 and unlike most funds which have one or 2 people running it, this one has 13 people in charge of various areas. The benefits of this leadership style is that should one leave it doesn't impact the fund as happened to Fidelity's Magellan Fund when Lynch left. The D&C fund has in the past 15 years reported, never lost more then 2.4% of it's NAV in any given year, despite the over all market declines we have seen in the early 90's and even in 2002, a very bad year.. It has beat the S&P by a good margin every year as far back as they report. I have this in my joint, and both mine and my wife's IRA. Unfortunately it also is closed to new investors but where I you I would keep an eye out for the day it opens. BTW, I am 64 and thus the reason for my investment conservatism. At your age I too was aggressively invested.

[GOPJ]

...but sometimes the weather man is right.

Hmmmm - today will tell.

[GOPJ]

How about that China market today? What are you buying?

[ExSES]

How about that China market today? What are you buying?

I wonder how far we are from having China's economics control the world at large? 2009?

We will live to see a new version of an old quote "When China gets a cold..., the world catches pneumonia?"