Doomsday poll: still a 98% risk of 2014 stock crash
Commentary: Psychological realities as new year dawns end irrational exuberance
By Paul B. Farrell
MarketWatch.com
Dec. 18, 2013
Yes, “Doomsday poll: 98% risk of 2014 stock crash” was my midyear headline. And yes, it still fits. Why? Because in the new year, after the irrational exuberance of the “Christmas rally” passes, reality will set in.
Remember the dark warnings from last January through the fall? Fed even saw an “unsustainable bubble” … Bill Gross: “Credit Supernova” … Jeffrey Gundlach: “Kaboom Ahead” … Charlie Ellis: “Don’t own bonds” … Gary Shilling: “Shocker” … Nouriel Roubini: “Prepare for perfect storm” … Peter Schiff “doubling down” on his “doomsday” prediction … InvestmentNews’s warning to 90,000 advisers: “Tick, tick … boom!”
Then a sudden, dramatic psychological twist: The investors’ collective brain tired of the negativity in mid-October after the last bearish headline: “America’s economic guillotine dead ahead.” A week later the reversal: “2014 ‘Year of the Boom’ bet on the bulls,” quoting Bank of America’s chief strategist: “Bulls roaring. Hot race to the New Year. Then beyond into a booming, bullish 2014 rally … Great Gatsby’s spirit is back in America. Top billing. Let the good times roll. Come join the party.”
By November irrational exuberance was accelerating, in full holiday mode: Headline, “Shiller’s hot P/Es powering a ‘Roaring Bull’ till 2017,” dubbed the 2014 “Katy Perry market.” A week later, another headline added: “10 reasons to be a bull in 2014.”
The Rest…HERE
