Markets, pundits, psychology, greed and fear

Many pundits have proclaimed the equity space as dead. People do not care about equities. Equities are simply out of fashion, the market is broken, only Algos trade, Europe is in a mess etc. There is one problem with this logic. It is called greed and fear. People have been abandoning the equity space for quite some time, but as we all know, the human race is a greedy one. We are not calling for a huge bull market having just started, but the psychology of people is at extreme levels when it comes to “I don’t care about equities”.

Cheap or not, if the market starts squeezing for real, with the help from Bernanke and his friends, investors might get caught in the trap of not having any equities in their portfolios, at least in the short term. As Einstein said; “Only two things are infinite, the universe and human stupidity, and I’m not sure about the former.”

The chart sums it up all pretty well. If you didn’t read PIMCO’s latest here is the link, urging people to be careful….