Looking Backwards

Irrational Exuberance. Remember the phrase?

Twelve years ago Alan Greenspan posed a question: how can we tell the difference between rational expectations and irrational exuberance?

For the next three years, the market went up by over 20% per year. Many thought that those prices were irrational. But if you had invested in stocks and held on through the ups and down when Greenspan posed his famous question, you would have earned 6 ½ %, even with the latest pullback.

Even for the Maestro, it’s hard to pick out a bubble when it’s happening. Back in December of ’86 we were on the verge of a productivity revolution that few could predict. Staying invested through thick and thin allows us benefit from unexpected good news.

Irrational Exuberance may be the best way to describe a market. But the only way to really know, is by looking backwards.


Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-03T19:12:55+00:00 June 10th, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
Leave a comment if you have any questions—I read them all!
– And Follow me on Twitter @GlobalMarketUpd

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