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What if the bag is not so expensive? This is what justifies such high ratings



Are the bags too expensive? The price we are willing to pay for something is a recurring commonplace that we go to often. Now, if parks like the Americans continue to set new highs with the energy of the rabbit of a popular brand, it is because they live in an alternative reality to the rest of the world, right?

If we take a look at the theory, it tells us that there may come a time when investor enthusiasm leaves behind its consideration of any risks that could trip the bull market.

This makes them forget any fear and caution, projecting their confidence in the good state of the economy and business profits in the future. In turn, this situation can lead stocks to particularly high valuations that are difficult to justify with the short term in hand.

Taken to the extreme, this theory remembered by Jim ayres and Larry hood on MarketWatch It can lead to bubbles, at which point the valuation is so exorbitant that it is completely disconnected from reality (present and future). But we are not there yet.

"Although there have been speculation points lately (SPACs, cryptocurrencies, 'meme' stocks …), we do not see that great disconnect between investor enthusiasm and the market that would lead us to worry," explain both experts. The next question is obligatory: what if the optimism is justified?

"Economic growth has been exceptionally strong led by a recovery in demand and a massively accommodative policy, at the same time that corporate profits have rebounded extraordinarily," they add. "If this growth continues, current valuations will seem more reasonable to us.", they acknowledge.

Both hide behind metrics such as risk appetite that, according to them, "are not yet at extreme levels." This is due to the fact that the investor has reoriented his portfolio from historically riskier sectors (small-caps, for example) to re-launch himself into the warm embrace of large-caps and, more specifically, growth stocks.

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