In at least one respect, I can identify with Millennials: FOMO. The ‘fear of missing out’ on things such as Game of Thrones, tickets to FC Cologne vs Arsenal, that perfect powder run on my snowboard holiday or front row seats at my daughters’ nativity plays. But looking at markets at the moment, it’s pretty obvious I’m not the only one with FOMO!
Markets are grinding higher and many investors are looking to call the top of the market cycle. In this light we ask ourselves what causes bubbles and more importantly how do we spot them? Over time I have collected a range of indicators that seek to have some predictive value in spotting bubbles emerging. I modestly call this the Heiligenberg Index.
The investment world seems to be collectively listening to ‘Weightless’ by Macaroni Union. The S&P 500 has not had a single day of losing 1% or more since Donald Trump’s election, realised volatility is near long-term lows and global equities are up almost 6% in only the first two months of the year. Not that I’m complaining, but what’s going on?