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- A Review Of The “Bidding”
Stepping Back To Look At What The Markets Are Telling Us
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In today’s Journal I thought it might be useful to have “a review of the bidding.”
I’m a card player. I love to play spades and bridge. One of the most important factors to understanding the games, in addition to reading the other players and handicapping what’s most likely to unfold, is knowing “the bid.” The bid, even more so than your own cards, should determine how you play your hand.
Today, in the financial markets, the bid is clear:
1. Stocks, on average, have rarely been this expensive.
2. Corporate credit has rarely been this widely available, at such low rates.
3. Investor optimism (around President Donald Trump, artificial intelligence, the parallel-processing revolution, SpaceX, etc.) has rarely been more euphoric, which has created enormous returns in tech stocks recently.
These factors, alone, would tell me my “opponents” in the markets have made an incredibly aggressive bid. Rather than trying to outbid them, my response is to play ultra-conservatively and try to “set them.”