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| http://blog.mpettis.com/2013/11/when-are-markets-rational/
Another article just out by Pettis. Something we who trade probably pretty much know, but others having no knowledge of trading might have trouble with. An excerpt:
"What happened instead, I would argue, is that conditions that led to a too-rapid expansion of liquidity at excessively low interest rates changed the environment in which fundamental investors could operate. As excess liquidity forced up asset prices, the likes of Warren Buffet found themselves unable to justify buying assets and so they dropped out of the market. As they did, the mix of investment strategies shifted until the market became dominated by speculators, and when this happened what drove prices was no longer the capital allocation decision of value investors but rather than short-term expectations of changes in demand and supply factors that characterize a highly speculative market." | |
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Good article on stock market valuations
