What we have on our hands with this buy at any cost, early 2018, stampeding bull run that is already taking out some analyst's year end targets is a "me too" trade at its purest. Whenever the calendar turns a few funny things happen to investors:
- Those who won last year don't believe they can lose so they hold off on doing any selling.
- Those who lost last year don't believe they can handle another year of losing so they start buying consensus driven winners from the year past.
- Those who did neither, in other words, sideline money, believe that since a new calendar year has arrived, they must get into the markets now before analyst projections of a market that is 15% higher by year end come to fruition.
And so we arrive at this point right here, right now. The S&P 500 hit 2759 today because investors both retail and professional don't want to be left out from another year of stupendous, mind-eviscerating gains.
The peer pressure to create gains on capital by taking on what are extraordinary levels of risk has not been at these levels since 1999. The crypto and FANG generation is beginning to become grounded in the fact that they deserve extraordinary gains by investing in technology innovation simply because they are intent on uprooting the establishment, and these investments symbolize that intent.
What is forgotten in the midst of any greed driven run is that markets function on manipulation. Trends are created to be tested. Investor psychology is molded in order to be torn down. Capital is shown a path towards generous returns only to see that path takes twist and turns nobody would originally expect.
All of the devious behavioral traits of the markets are currently lying in dormancy. Simply because they haven't shown up for an extended period of time only means that when they do, the force exerted on the downside could be much greater than most any investor is currently prepared for.