This is what euphoria feels like

[almostthere]

Paul Novell at Investing for a Living posted the following link to 1997 video from Frontlines on the then current views of that bull market:

https://www.youtube.com/watch?v=BQ2Y3lr ... e=youtu.be

The video is titled "Betting on the Market".

Any time they mention the word, 'mutual fund' just insert the word ETF.

There are so many good lines in it that I couldn't even begin to start to list them. (Although I thought 'this is better than sex' was pretty good.)

Spoiler - Jim Cramer had more hair in 1997.

[BlueNote]

I wonder how the couple that owned the carpet store fared. At one point they talked about investing their life savings in two small cap stocks based on very little research. The market didn't really crash until 2000 so maybe they actually pulled off a big win, who knows.

[halfmoon]

Interesting video. That level of religious fervor makes me nervous, no matter the subject. If I've already told this story, my apologies:

I remember a retired acquaintance telling me in the late nineties that she was going to take out a mortgage on her paid-off house and invest it in the market because she had 'a talent for picking stocks'. I told her that everyone has a talent for picking stocks in a bull market. She expressed great disappointment in my unsupportive attitude and stopped coming around, so I don't know how it turned out.

[Jason]

I wonder how the couple that owned the carpet store fared. At one point they talked about investing their life savings in two small cap stocks based on very little research. The market didn't really crash until 2000 so maybe they actually pulled off a big win, who knows.

The statistics. So unless they are an outlier, he is currently laying carpet on artificial knees. Both the modest house and McMansion are long gone. Their now adult kids suffer panic attacks every time they see a NYSE scroll. Their two small cap stocks "vcrswap.net" and "organdonationkiosks.org" ran out of funding before they went to market. They semi-correctly blame wall street for not being fiduciaries to their greedy small cap stock buying asses and the bank for giving them that humungous mortgage on the mansion that lost 50% of its value before they took their first shit in one of it's five bathrooms. But at least everything is finally turning around as their 2016 presidential selection won the popular vote in a fucking huge fashion and is going to make them great once again.

[almostthere]

The video reminded me of the old wall street adage from John Templeton:
"Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.”

Up until now, we had largely avoided euphoria in this bull market. However, I know that I personally am starting to feel some euphoria, especially so far this year.

Then I see this video and I realize that what I feel now is no where near the intensity of what people felt in 1997. The 1997 bull market went on for few more years even after the fervor one notes in the video.

Also note the amount of "Fear of Missing Out" type comments in the video. Fear or missing out in this bull market may only now really be beginning to rear its dangerous head.

[Jason]

Also note the amount of "Fear of Missing Out" type comments in the video.

That's an interesting point. It made me reevaluate my understanding of the greed/fear dichotomy. I always pictured it as two sides of the same coin. But in this scenario, it's a one sided coin with a Janus Head. I have completely avoided the bitcoin issue because I know that at this point, I am motivated by fear of missing out. Maybe I will, maybe I won't. I just know its not a good place to start when considering investing options.

The other issue is that these people were primarily looking at the stock market as a means to satiate their materialism and chase their false notions of greater life satisfaction through increased ability to accumulate and demonstrate accumulation, either through public demonstrations of accumulation or publicly blowing hard about their accumulation. That was why it led to the housing bust. The banks knew that most would not keep the gains if the pipe was reloaded because these were the type of people who had no "number." ERE greed is monetary and has a teleos. Non ERE greed is materialistic with no end in sight. If you are going to be greedy, which I'm assuming everyone is to some extent, it's best to be self aware of it - know how greedy you need to be and not be concerned with how greedy your neighbor is because greed has different expressions. Most people's greed is externalized. Millionaire next door greed is internalized. My guess is that these were people who most likely never had a budget. ERE, to me at least, is greed with a budget. Or maybe greed without covetousness is a better way of putting it.

[7Wannabe5]

@Jason:

In simplest lingo, we here at ERE follow the rule of "Don't smoke your own product."

Because I ran a tiny business that was based on trade of real inventories, my perspective is a bit different. One time my sister and I attended a book sale being held by a University that was building a new library and discarding a huge number of volumes prior to the move. Because very few other book dealers are math literate, we were able to purchase boxes and boxes full of mid-20th century translations on still relevant topics of research. This one find provided us both with about 6 months worth of income spread over 2 or 3 years of slow, steady sales. Another holiday season, when we were engaged in retail arbitrage, one particular Nerf gun was selling for 5x as much on Amazon as at a local retail chain, so we drove around buying up as many as we could, and shipping them off into the distribution chain as soon as possible. I think that was the fastest money we ever made. I experienced something like euphoria with both of these scores, but different flavor. Like steak vs. candy.

So, is your next share in an Index Fund more like a Nerf gun or an English translation of a Russian mathematician's research in the realm of topology? I don't know the answer, but I think it has something to do with the relationship between information, complexity, price, value, and energy density. Unfortunately, there is not yet even agreement on definition of "complexity" within the scientific community, so it is sort of like pornography in that you know it when you see it. My definition is something like how long would it take you to recreate if you started with nothing but sunshine and a vacant lot. I mean, there is probably already an episode of Primitive Technology in which he creates "something like a Nerf gun", but not an episode where he creates "something like a translation from Russian on topic of topology." Of course, one would also have to parse the difference between intellectual property and instance of artifact.

[Jason]

I have to say that was a thoroughly enjoyable read despite me not having the faintest clue about what the fuck you are talking about. It was like taking a stroll through a garden with a woman who you begin to suspect may be completely batshit crazy but you ultimately decide it doesn't matter because it's a nice day and the fight to understand is often just an impediment to a good conversation.

[7Wannabe5]

@Jason:

Apologize for not being clear. I will attempt to elucidate. "Don't smoke your own product." is advice that might have been offered in the 1970s by an individual who was experienced in the brokerage of marijuana to another individual who was new to the business.

[Sclass]

@Jason love your description of a typical 7W post. I’ve learned so much from 7W over the years but I have to slow down as I read her posts.

I get it 7W. I was trying to remember where I heard this.

https://m.youtube.com/watch?v=OJM8yJTn_I0

Thanks for the OP. I actually watched that show when it aired. Wow. It is really interesting trying to recall how I felt then vs. now as I listened. It made a lot of sense then and now those people sound like idiots.

Too bad that lady bought AMLN and not AMZN. I recall passing Amazon back then because books by internet sounded like pet food by internet (pets.com).

I have a strong memory of waiting in line at MicroCenter in Santa Clara getting a PC. The line was long and I got to talk to an old couple in front of me. The deal was sign up for an etrade account and get a free PC. Everyone in the line was day trading stocks. The old guy said he was buying Yahoo! At $100. He mentioned another stock Caliper. “I like Caliper”. The guy sounded so dumb he could barely talk. I asked what Caliper did. He said after a pause, “something Internet”. Turned out Caliper was a chemical analysis business doing micro fluidics. That is how dumb the money was back then.

When the shoeshine boy tells you which stocks to buy you better start looking for the exits. I forgot who said this.

I’m getting old. I traded that market. Very formative years for me.

This was the first time I lost half of my money. It happened again in 2008. Now I know it’s just part of the game and I am not too worried about the next one.

And that is when you get to relearn that the little pieces of paper or bits of ether are only worth what people will pay today. The majority of the players will be stuck holding a bunch of plastic chips.

[Did]

Yeah fond of 7W but I can't read anything she writes unless it is extremely brief. My eyes glaze over. I think my comprehension levels/tolerance have/has dropped since I quit my job.

[Riggerjack]

So AMLN was Amylin pharmaceuticals. Bought out by Bristol Myers for 5.3 B in 2012. So the carpet people had a chance with it. Unfortunately, I doubt they knew enough to quit while ahead, but with luck they could have been still up after the dot com crash. Maybe that inspired some deeper thoughts.

The Frontline piece was written and edited to make people feel smart for not getting caught in this stock market trap. Anyone who didn't fit that script was edited out before air. Now we, 20 years later are feeling smart for identifying the idiots with the benefit of hindsight, but they were preselected to be presented as idiots.

Honestly, that is my main problem with PBS and NPR, they are programmed to make me feel smart, but not make me any smarter. Look to long time supporters of public broadcasting to see how this plays out long term.

As to 7w5, her posts are... A bit eccentric in terms and symbols, but usually fairly straightforward. Try substituting synonyms in her posts to see if it suddenly makes more sense. Generally, her posts are worth the effort, even if only in the practice of breaking out of my preexisting frameworks. Her strength is in looking at existing issues from a different perspective, and really, we don't have enough of this anymore, if ever we did.

[blackbird]

Just this morning I was updating my personal savings spreadsheet, and I was finally forced to admit I'm a little scared. We exceeded our total savings goal by almost $12,000 but I didn't make $12,000 more than last year, those extra dollars are just stock market valuations. As someone who did not truly begin any kind of savings plan until about 10 years ago, and who has only been able to increment up slowly over time, I have never had a pile that was large enough to cause me serious discomfort when thinking about its possible loss.

That happened today. I hit my target allocation (86%) in stock (which has been set for a fair amount of time now), so I thought I would feel better. But that number was targeted (and the ones before it) as a "catch-up" number b/c I felt much further behind than I wanted to be in my race to early retirement. So now I have a number on a spreadsheet that represents about 1/4 fourth of where I want to be ten years from now but all of that has been built on index funds. The 'old' allocation rule of thumb (100-age) would actually be 61% stocks for me (!) and even the 'new' one (120-age) would only see my stock ratio at 81%. So 86% is problematic.

Here is where I have run into a wall with early retirement planning / general financial intelligence. Finding and adopting a rigid savings plan (think the Boglehead-ish three part portfolio based on index funds (stocks, bonds, cash)) was a big jump up for me, coming as I do from a very rural, very poor background. Now I'm exactly where that type of plan should take me, but I don't know how to 'level-up' or jump to the next summit. I can see how fragile my position is but I can't see the means to diversify myself to be more resilient.

So the euphoria concept that the OP is pointing to is truly terrifying for me. I see references not just here but in many places to how precarious the situation becomes when almost everyone is chained to index funds in an assumed limitless path up. For Christmas I asked my wife to get me a new copy of Jacob's book so that i could go through and see if the pieces I didn't grok when I first read it years ago actually make more sense now and provide a beacon out of my predicament. Until then I hope people can keep the euphoria from getting out of control. For the time being, I'm directing my after tax savings into cash, and from there into paying off the ~$60,000 left on our mortgage (our only debt). Even though my pre-tax savings are still in lifecycle funds (for the generation younger than me, per the 'catching up be more aggressive' mentality), having the post tax stuff go to cash / mortgage tempers my concern.

Euphoria, ha!

[Riggerjack]

@ blackbird

I find it helps to think of my retirement funds not in dollars, but in points. When I have enough points, I can stop working to add more. that's it. Sometimes my points make more points, sometimes less. But that is the nature of points, and nothing to sweat over.

Try it, it may help.

Also, Jacob recommends a few books on investing. The one I liked best was "the 4 pillars of investing" it was an excellent combination of detailed enough to be useful, and plain English enough to be an easy read. The links are around here somewhere, I just used the local library, and read the print version.

Good luck, and try to remember this is only money, in a pinch, you can always make more.

[blackbird]

Thanks for the encouragement Riggerjack.

[CS]

Oh my, am I alone in thinking it was unkind (as a generous word) to write a post implying that someone is batshit crazy because they did not understand the post that person wrote?

That is not my idea of humor. The fact that it was accepted, applauded even, makes me sad and disappointed in this group.

[Kriegsspiel]

Oh my, am I alone in thinking it was unkind (as a generous word) to write a post implying that someone is batshit crazy because they did not understand the post that person wrote?

That is not my idea of humor. The fact that it was accepted, applauded even, makes me sad and disappointed in this group.

Guys shittalk people they like all the time, it's not meant in a mean-spirited way.

[Riggerjack]

Oh my, am I alone in thinking it was unkind (as a generous word) to write a post implying that someone is batshit crazy because they did not understand the post that person wrote?

And you then decided to jump to 7w5's defense. Was that because you were offended, or because you felt that she couldn't defend herself, or judge for herself whether offense was given?

Not that it matters, I'm just questioning what looks like a pattern. This isn't the first time you have taken a swipe at Jason. But I will concede that if anyone around here is going to offend you, odds are good it's Jason.

I don't know much about him, but I'm sure he can defend himself. I do know quite a bit about 7w5, and I'd be surprised if she were offended by Jason's posts, or if she didn't feel up to defending herself, if she thought it necessary.

3rd parties stepping in, (as I am now) risk turning a mild offense into a flame war as people form sides and fight it out. For this reason, I try not to chastise members. But I'm an INTJ, my version of not chastising looks pretty judgemental anyway...

[Sclass]

The Frontline piece was written and edited to make people feel smart for not getting caught in this stock market trap. Anyone who didn't fit that script was edited out before air. Now we, 20 years later are feeling smart for identifying the idiots with the benefit of hindsight, but they were preselected to be presented as idiots.

Honestly, that is my main problem with PBS and NPR, they are programmed to make me feel smart, but not make me any smarter. Look to long time supporters of public broadcasting to see how this plays out long term.

I watched the segment again.

Yes RJ the saving the little guy agenda came out. My SO watched a long and said there was the “confirmation narrative“ of buying stocks being risky and dumb. I didn’t see this the first time through. The other thing that bothered me was the bald guy with glasses (I suspect a journalist) saying something like it is a fantasy that you can get in and get out and make money but everyone loses.

I’ve got news for him and everyone else on this BS. There was somebody on the other side of the trade.

[Jason]

@Jason:

Apologize for not being clear. I will attempt to elucidate. "Don't smoke your own product." is advice that might have been offered in the 1970s by an individual who was experienced in the brokerage of marijuana to another individual who was new to the business.

No need to apologize. My lack of comprehension does not necessarily extrapolate to a universal lack of comprehension, although in this specific instance, I'm thinking you were approaching Derrida levels.

And I don't mean to make you the object of discussion or be disrespectful to the topic at hand, but I just felt for purposes of posterity, it was worth taking a moment out to note that in your working anthology of head scratching content, that may have been your Ulysses.

In any event, I would rather be confused and entertained than comprehending and bored, so by all means, keep the batshit crazy coming.