|
PureBytes Links
Trading Reference Links
|
Earl Adamy wrote:
> Some excellent points here supporting the fact that markets can exist for
> substantial periods where prices and intrinsic value bear little or no
> relationship. However, the expectation of continued high rates of future price
> increases, without regard to intrinsic value, are one of the certain measures of
> a mania.
I guess this depends on how "mania" is to be understood. "Excessive or unreasonable
enthusiasm" is what the dictionary tells us - I'd want to say that in this case it
is neither. Looking at prices in terms of "intrinsic value" is out of touch, as it
neglects to account for the driving force behind markets today, which is capital
accumulation, with dividends only representing a paltry amount of total expected
return. The "mania" is the reality here.
Regards,
A.J.
|