The nosedive at the end of last week and today’s rocket launch have, I think, settled one question once and for all. There is no relationship between tangible value and stock prices. The market has clearly demonstrated that it is purely based on the madness of the crowd, a collective delusion, a mass hallucination. That’s the good news, such as it is.
The bad news is, something like 40% of our economy is now controlled by this collective delusion. 20 years ago it was less than 20% of our economy, but largely as a result of pure greed and ruthless guile it has grown to gargantuan proportions.
It’s not exactly a comforting predictor of future prosperity. With so large a part of the economy that we all depend on for jobs, clients, customers, and shopping controlled by a mass hallucination, just about anything is just about certain to happen. Just about the only thing we can depend on going forward is volatility. There will continue to be large swings, both up and down, as long as this coaster stays on the tracks.
My advice to you is to look for ways to protect yourselves from deep dives, and take advantage of mad climbs. We all need to learn to adapt to crazy swings, and if possible to prosper from them. It isn’t what I would choose as a forecast if I had a choice, but we is where we is.
A word to the wise is worth two in the bush.