As we are in the 11th year of a stock market rally off the Financial Crisis low of March 2009, a quote came to mind the other day.
“Markets can stay irrational longer than you can remain solvent.” – John Maynard Keynes
This quote was attributed to Keynes in the 1930s when the stock market was a very trying time. But indeed this saying applies to any market…stocks, futures, currencies, etc.
As our stock market continues to defy gravity and valuations remain near levels seen only in 1929 and the late 90’s (see the CAPE ratio) it is good to keep this quote in mind.