"new era, a new paradigm. Maybe the old rules really don't apply."
They might could not. Thought provoke on this a while though:
"While traveling in Japan in 1987, Leo Melamed, president of the Chicago Mercantile Exchange, questioned his Japanese hosts on how such high valuations could be placed on Japanese stocks. 'You don't understand,' they responded, 'We've moved to an entirely new way of valuing stocks here in Japan.' At that moment Melamed recalls feeling certain that the Japanese market was near the end of its great bull market. For it is when investors cast aside the lessons of history that those lessons come back to haunt the market." (Siegel, J., Stocks for the long run, p. 125, emphases added)
It took two more years for the Japanese market to reach 39,000 before beginning its crash. The run up was a new era. Just like it was a new era during the late 20s, and the go go stock era etc. There are always new eras. The problem is, the old era just don't know that it is dead and never supposed to reassert itself. That darn old era keeps on coming back. Someone's just got to educate that old era....and then, we'll all be okay.
Ciao,
David Todtman |
