We are in a mood of extreme pessimism. So now to talk about “irrational exuberance” may be a little out of place.

By the way if you are new to the finance business, you may not have heard of Alan Greenspan or of “irrational exuberance”. Of course Alan can now be said to be of another fame “Mea culpa” – when he confessed to mistakes he may have made.

What Alan Greenspan of “irrational exuberance” fame mean by that:

When all people believe that:

•    The reward will outweigh the risk
•    This time it will be different
•    Any setbacks will only be temporary
•    Anyone who disagrees with the above is stupid.

Can we now tweak it a little and say we are in a state of “irrational fear” and this is what it means:

1.    The risk will outweigh the reward
2.    This time it will be different
3.    Any rally will be a bear market rally
4.    Anyone who disagrees with the above is stupid.

Of course with printer Ben, and bail outs all over the world, nobody seems to be interested in equity markets, and the markets may take 24, 36, 48 or 54 months to recover.

However, recover it will!

We all like a bull market, do we not! Even though a bear market makes companies get more efficient with their resources. Salaries get rationalized, rents get realistic, builders start behaving, ….we need a bear market regularly!