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Is Too Much Euphoria a Bad Sign? (translated from elliottwave com)
Track Your Results Investors Are in a Good Mood. What Could Go Wrong? The October Elliott Wave Theorist offers these insights: TopDown Charts publishes an indicator that combines three sentiment indicators: (1) Sentiment readings based on investor surveys and (2) the Forward PE Ratio, which is the consensus price-to-earnings ratio for the next 12 months. It reflects the degree of confidence in future earnings growth. (3) The VIX, which measures whether stock price movements are panicked or complacent. As you can see in the chart below, the latest figures set an all-time high. Speaking of all-time highs, Warren Buffett’s favorite metric, the price of the FT Wilshire 5000 stock index relative to annual gross domestic product, hit an all-time high of 200%, as shown in the chart below. No wonder Berkshire Hathaway has money. You can argue that bears are stupid, or you can argue that bulls are stupid. Even if both conclusions are potentially true, we must admit that bears are stupid but safe, and bulls are stupid and vulnerable. You can now find the Elliott Wave Principles, a guide for wave experts, for free here. Don't forget to subscribe to my Telegram channel