The more popular a particular investment becomes, the less its profit potential. Read more.
The sad ending to this ebullience was the first three-year decline in equities since 1930. For the seven years following the market’s peak in early 2000, the annualized return of the S&P 500 was a mere 0.9 per cent. Importantly, these subpar returns encompassed a bitter and painful peak-to-trough loss of about 50 per cent.was a sure-fire way to amass wealth. Zealots justified unsustainable values with oft-cited mantras such as “they’re not making any more land,” or “you can live in it,” etc.
Conversely, it’s only when people disagree that opportunities to achieve above-average returns exist. In Berkshire Hathaway Inc.’s 2007 annual report, Warren Buffett observed, “Of the 10 non-oil companies having the largest market capitalization in 1965 — titans such as General Motors, Sears, DuPont and Eastman Kodak — only one made it to the 2006 list.”
Importantly, current gauges of sentiment are beginning to show signs that markets are getting ahead of themselves.
France Dernières Nouvelles, France Actualités
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