STRAIGHT TALK
MARK BARNES: Fear of missing out lays the ground for high-flying equity market’s bumpy landing
Cold turkey is harder than incremental addiction, and we’ve all become easy-money addicts
Fomo. That’s the only explanation I can find to support these extravagant asset valuations. Market prices are the weighted aggregate outcome of millions of people’s buy and sell decisions. Easy access to information and markets has made everyone an expert. In truth, I’m not sure there are any – analysis has had to take a back seat in a world of Fomo (fear of missing out) momentum. Last Wednesday, 240,000 new users signed up to cryptocurrency exchange Binance.com, which lays claim to millions of sign-ups every week. Crowd trading, we’ll call it. Even moving away from the science-fiction world of cryptos to the world of equities, there is an unexplained exuberance in the equity markets. The S&P 500 is up about 10% already in 2018 and shares have been rising at four times the rate they did this time in 2017. At 3.4 times book value (higher than at any time over the last 16 years), we need to check the fundamentals and question the drivers. Some are obvious. The Trump tax reforms will a...
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