Here are the signs of euphoria that I am watching for:
- Everyone is talking about the stock market. Not. All my spouses relatives, who were all made money as speculators in the dotcom boom, have no interest in stocks anymore. At a neighborhood cookout, I couldn't even get people who are in the business to have any interest in talking about stocks. The only hint I have is a neighbor telling me she has been "watching" NVDA.
- All stocks are rising. Not. There are still a large number of stocks declining and many stocks that have fallen previously are still near their 52 week low.
- There are no more bears. Not. I still see a number of bears and significant bearish sentiment. I know one person that has sold all his equities and has invested in a 2X bear fund. When there are no more bears, it's a sure sign that euphoria is near or happening.
- FOMO - Fear Of Missing Out. Maybe. People start chasing high flying stocks assuming the stock price will go higher. Stocks advance in the double digits on a frequent basis due to buyers chasing the stock. A few stocks have advanced significantly this year and those are being chased, but not the majority of stocks.
As I see it, euphoria may be coming, but it's not here yet. So I will continue to maintain our investments and taking some profits by trimming positions as the market keeps advancing.
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This is not financial or investment advice. Please consult a professional advisor.
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