Robert Shiller (Nobel Prize winning economist) notes:
“Speculative
markets have always been vulnerable to illusion. But seeing the folly in markets
provides no clear advantage in forecasting outcomes, because changes in the
force of the illusion are difficult to predict.
In the US, two
illusions have been important recently in financial markets. One is the
carefully nurtured perception that President-elect Donald Trump is a business
genius who can apply his deal-making skills to make America great again.
The other is a
naturally occurring illusion: the proximity of Dow 20,000. The Dow Jones
Industrial Average has been above 19,000 since November, and countless news
stories have focused on its flirtation with the 20,000 barrier – which might be
crossed by the time this commentary is published. Whatever happens, Dow 20,000
will still have a psychological impact on markets.”