Jonathan Wilmot of CSFB notes that “Risk Appetite, which has been in the euphoria zone, is quickly approaching an 11-year high.” He notes that since 1981 there have been 7 prior euphoria spikes and in six of those episodes, global equity returns posted a new high for the cycle within 3 months.
Risk Appetite: Too Soon To Panic About Euphoria Jonathan Wilmot, CSFB
Wilmot notes that vigilance is in order, but “it is probably too soon to panic.” Spikes into euphoria territory provide less urgent signals than dips into the panic zone. (hope springs eternal, or perhaps it simply reflects the psychological fact that it is easier to remain complacent for an extended period than to persist in a state of panic for weeks or months at a time).
Quote of the Day:
“Every truth passes through
three stages before it is recognized: In the first it is ridiculed; in the
second it is opposed; in the third it is regarded as self-evident.”
–Arthur Schopenhauer (1788-1860)