Irrational Exuberance

The nice thing about the investment profession is that creativity is more important than striving for perfection. Striving for a perfect world runs the risk of chasing the market. By selecting investments in which all the good news is discounted, a portfolio is created that structurally lags behind the market.

There is a risky and dangerous novelty in the financial markets: “the prices of stocks, bonds and real estate, the three most important asset classes in the United States, are all extremely high”. 

That is the warning from Robert Shiller, the 2013 Nobel Prize-winning economist and scientist, in an opinion piece in the New York Times. “Never have the three been so overvalued at the same time in modern history.”

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