January is flying by and the theme of this month is FOMO -Fear Of Missing Out. The article in today’s Globe & Mail, included at the end of this post, is all about this. Investors ignoring insanely expensive valuations on equities, sending stock markets ever higher week after week.
When the party is going strong, the most unpopular person is the one who injects a note of somber, sober commentary to the situation. So, keeping one’s head when everyone around is never easy, nor popular, but our clients’ financial wellbeing is our overriding concern, not popularity. So, at the risk of “killing the buzz,” we have real concerns that markets are caught up in the kind of irrational exuberance we witnessed in the late 1990s, and we know how that ended (History Note: stocks fell 50% March 2000-March 2003).
However, momentum is Newton’s 1st Law: Objects will remain in motion unless acted on by an equal and opposite force. So, we expect the party to continue for a while longer, with new record highs being set. Until the needle comes off the record (History Note: a record player was a device used to listen to music before cassette tapes, CDs and music streaming). Oh, and the sound made by the needle before the music stopped was an ear piercing, scratchy discordant sound that made everyone in earshot wince.