ALERT: Fear And Greed Index Warning, Plus Sir Isaac Newton And The South Sea Bubble

November 4 (King World News) – From Jeff Saut’s note today: The South Sea Company was a joint stock company created in 1711 to help fund Britain’s war debt. The company received a monopoly to trade with South America, hence its name. Over the years the stock price soared. Even Sir Isaac Newton had shares in the company and he watched his wealth compound immensely.

Wanting to be somewhat conservative he sold all of his shares only to see the share price trade ever higher. Like a moth to a flame even Sir Isaac could not resist the speculative bubble and rebought his shares at ever higher prices. And then, around 1720, the speculative fever broke wiping out not only Newton’s wealth, but that of many of Britain’s finest families. And that is when Newton wrote, “I can calculate the movement of the stars, but not the madness of men.”

I recalled this quote as I watched stocks streak higher over the past two sessions, as I haunted New York city in the past few days wishing I could tell accounts that I had predicted the nearly 300 points “Dow Delight,” but alas I did not. Subsequently, I received this quip from one of our financial advisors, “Is there a point where we have to call clients and eat crow, in regard to a pullback, we have exercised patience (a rare commodity on Wall Street) and have felt the pain of holding some cash?”