An often mentioned sign of the end of a bull market is widespread euphoric sentiment. Do you agree? If so, what signs of euphoria are you seeing?
The stock market as a whole has been euphoric the past twelve months apart from the pandemic dip.
A year ago the S&P 500 was around 2954. Today it's 3839. That's +30% increase in a year when the economy has mightily struggled, some industries have gotten slaughtered (hospitality, transportation, live entertainment/sports) and there is still a lot of unemployment.
If that's isn't euphoric, I don't know what is. Remember that
includes the pandemic drop. It's not that the stock market weathered COVID-19 challenges. It went bonkers despite the pandemic.
For rich people, it wasn't just a V-shaped recovery, it was a banner year.
And that's just the mainstream corporate S&P 500. The small cap Russell 2000 is +49% TTM. The tech-heavy Nasdaq Composite is +54% TTM.
I can see exceptions for certain industries and sectors. Shelter-in-place policies have helped sell more semiconductor-laden equipment and pushed the adoption of more cloud-based technologies. The videogame industry had a blockbuster year as people played more while at home.
There are other economic indications that are eyebrow raising including a surge in home prices through the terrible Q4 (at least from an infection standpoint). Some of my buddies are in real estate and apart from a couple of months early in the lockdown (March-April), the real estate industry just plowed forward, undoubtably aided by low interest rates.
Anyhow, we are sort of due for a market correction. The S&P 500 has grown pretty steadily since the mid-March 2020 low and I would think a 10-15% correction is part of our not-too-distant future.
