Attention Economy


Saturday, February 20, 2021

Stock Market Bubbles - Interesting Insights

Bubble Warnings Go Unheeded as Everyone Is a Buyer in Stocks
https://www.bloomberg.com/news/articles/2021-02-20/bubble-warnings-go-unheeded-as-everyone-is-a-buyer-in-stocks
““It’s been truly amazing,” said Brian Culpepper, a money manager at James Investment Research. “Everyone just thinks the stock market is going to go, go, go,” he added. “Whether it’s herd mentality, or fear of being left behind, that’s what you’re seeing.”
Dated from the last bear-market bottom, the boom cycle is young -- 11 months, versus five years for the median bull market. But its velocity makes up for the age. The S&P 500’s current peak-to-trough gain already eclipses three other full bull markets. If history is any guide, this one is likely more than half done as the median return of the 13 previous bull cycles was 126%”.
 
Tech Valuations Are Getting Scary. Here’s How We Know.
https://www.barrons.com/articles/tech-stocks-look-too-pricey-and-wall-street-analysts-dont-seem-to-care-51613782764 

Hey, GameStop Traders, Buying to Push the Price Doesn’t Work
https://www.bloomberg.com/news/articles/2021-02-19/hey-gamestop-traders-buying-to-push-the-price-doesn-t-work
The investment newbies who lost money speculating on GameStop Corp. shares made a classic mistake: They tried to push up the share price through their own purchases.
That did not work and never has, says Lasse Pedersen, a finance professor at Copenhagen Business School and a principal at AQR Capital Management, the big Greenwich, Conn.-based investment manager. He spoke in his academic capacity on Feb. 19 in a webinar hosted by Princeton University economist Markus Brunnermeier.
By buying shares to make them go up, you’re acquiring them at steadily higher prices. When you start to sell and your selling inevitably pushes the shares back down, your average sales price will be lower than your average purchase price, which is a long way of saying you will lose money, Pedersen said”.


Related:
Inflation Problems Depend on Where You Look for Them
https://www.wsj.com/articles/inflation-depends-on-where-you-look-for-it-11613903414
If the Fed’s low interest rates lead to trouble, the reason might be climbing asset prices rather than consumer prices


If yields rise more quickly and unpredictably than expected, that would be disruptive to assets like shares, many analysts say.