Below are some of the most interesting things I came across this week. Click here to subscribe to our free weekly newsletter and get this post delivered to your inbox each Saturday morning.
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Jeremy Grantham‘s advice to investors today: “Don’t be conned into being super-optimistic by the industry that makes money from overconfidence. Look around for signs of crazy bubble behavior which we have seen as splendidly in this last several years as we have ever seen in history.”
STAT
As Jason Zweig points out, the crowding into the most popular names in the market is extreme: “Money always chases performance, and big stocks have all the momentum—burnished by the artificial-intelligence boom… The market value of the five biggest companies in the S&P 500 is nearly five times the combined market value of the Russell 2000 index.”
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And the speculative activity outside of those stocks has also been spectacular, as well, led most recently by bitcoin treasury companies. The Financial Times explains, “A bitcoin in a box is valued higher by the market than a bitcoin, so by raising money to buy bitcoins and putting them in boxes, a company can raise more money to buy bitcoins to put them in boxes.”
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Didn’t get that? That’s okay, neither does Vanguard which considers bitcoin “inappropriate” for long-term investors. “Yet thanks to the cold logic of index investing, the $10 trillion money-management giant is now the biggest backer of Strategy, the software firm that famously reinvented itself as a proxy for Bitcoin and became a poster child for the industry’s ambitions,” reports Bloomberg.
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Meanwhile, perhaps seeing things more in line with Grantham’s views, “insiders today are more bearish than at any time in at least a decade,” writes Mark Hulbert. Certainly, they are not easily conned by Wall Street into being super-optimistic when their insider status gives them, in aggregate, a far better picture of the underlying trend in the economy.
