One More Trader Capitulates: "It's A Bubble, Buy It"

www.zerohedge.com | 10/12/2017 | Staff
"The world is full of bubbles," warns former fund manager Richard Breslow but that shouldn't stop you from buying 'em. In the latest capitulation of a former realist, Breslow's confessional clarifies what many, many market participants clearly believe (and what Goldman called "unusually bullish"), "The reality is, you don’t have to like equities to buy them. And that will remain true until it isn’t. For now, beauty is in the eyes of the holder."

"Almost there. S&P 500 price to sales ratio is just 4% from March 2000 peak."

Day - Set - Record - Prices - Equity

Another day, another set of record prices in global equity markets. But trust me, they aren’t doing it with the sole purpose of vexing you. How they are trading is logical and explainable. And I’m not saying that to irritate you either. It’s just that you can’t look at the current valuations and then reread Graham and Dodd in hopes of a simple explanation.

To make matters worse for those who don’t trust this market, you needn’t be a hopeless optimist, oblivious to geopolitics, overly complacent nor stupid to keep piling on.

Corrections - Course

Even allowing that corrections are, of course, inevitable, you can’t accurately predict when they’re going to happen.

The most simple explanation will also be the least satisfying. The market keeps going up and quant models and passive index funds don’t care why, just that it is. And they choose to or are forced to keep participating. Breadth and volume and all other sorts of arbitrary measures come and go into focus over time. But as factors in a model they eventually get downgraded and become part of the error function. Putting continued emphasis on them is a subjective decision not based on current statistical proof--in today’s world. Models understand what a...
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