“Wall Street strategist who called dotcom crash says stocks are in a bubble driven by Fed,” headlined MarketWatch recently. It sounds alarming, but the warning comes from Societe Generale’s Albert Edwards, who has famously been bearish for most of the last 25 years.
There are some signs of froth. Hedge fund exposure to momentum stocks has reached all-time highs. Citigroup’s stock sentiment model is in the euphoria zone. Barclays notes CNN’s fear/greed indicator is in extreme greed territory. Retail sentiment is unusually bullish. Positioning is “high”, says Barclays.
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