If my limited interactions with the outside world are any indication, I’d say we’ve gotten to the “cab driver” period that institutional investors often talk about: When your cab driver starts giving you stock tips, the top is probably near.
That’s not a reliable predictor, of course, and I guess it would be Uber drivers today — or maybe grocery store clerks, since that’s about the only person I interact with these days outside of my household… but now, really, it’s not the passing conversations on the street that mark the underlying buzz of stock market fascination, it’s the new traders and speculators on free and easy platforms like Robinhood who live their lives in the public sphere, sharing their tips on YouTube and TikTok and building followings of their peers who want a taste of the action. That’s what leads people to say, “Hey, maybe I should start trading stocks — my buddy at work and this idiot on YouTube are making big bucks!”
Which means it’s time for the solons of punditry to come down from their towers and say, “If these dummies are getting in, it’s time for us smarter folks to get out.” It always sounds so very demeaning when the gurus say things like that, even though I’m sure they don’t intend to look down their noses quite so obviously, but that doesn’t make their misgivings less worthy of some attention. The two that caught my eye this week were Leon Cooperman and Jeremy Grantham.
Cooperman said, “The gambling casinos are closed and the [Federal Reserve] is promising you free money for the next two years, so let them speculate. Let them buy and trade. From my experience, this kind of stuff will end in tears.” (You can almost hear the Marie Antoinette accent in there, no?)
But Grantham was rather more subdued in his comments, and arguably has a better macro forecasting record to call on in making his pronouncements… so it seemed to cause some market jitters on Wednesday when he called “Bubble!” in a CNBC interview:
“My confidence is rising quite rapidly that this is, in fact, becoming the fourth, real McCoy, bubble of my investment career. The great bubbles can go on a long time and inflict a lot of pain but at least I think we know now that we’re in one. And the chutzpah involved in ...