IS THE STOCK MARKET POISED FOR ANOTHER CRASH?
“Irrational exuberance”. For those who were privy to the dot com boom in the 1990s, the phrase holds significant meaning. Former Federal Reserve Chairman Alan Greenspan used it when describing the potentially overvalued market. In 20/20 hindsight, we see that Greenspan may have been hinting at what was to come. In 2016, Janet Yellen may well be using her own version of “irrational exuberance”. The Fed’s most recent report noted that stock valuations “have increased to a level well above their median of the past three decades." Investors are angry with Yellen for the very same reasons that they were angry with Greenspan: hypocrisy. Greenspan contributed to the inflation of the stock market and then made a speech complaining about its state. His actions are mirrored in Yellen’s, resulting in increasing unfavorability for the current Federal Reserve Chairwoman.