Stripping the market of irrational exuberance – the view from Twitterville

Remember when Alan Greenspan first accused the market of “irrational exuberance”? In his blog The Big Picture, Barry Ritholtz  reminds us: It was December 1996 and the S&P500 stood at 744.38.  Today, the  index blew through that number to land at 700; the Dow is only a few hundred points away from where it stood back then.

On and off throughout the day, I checked into StockTwits and Twitter to take measure of reactions to the Dow breaking through 7000, a first in nearly 12 years.  Oil plunged 10% and Treasurys (those “safe” investments) rallied. Some wondered if today’s market devastation signalled a bottom (yet again?) while others seemed to be stunned at the barrage of bad news: AIG announced that it had managed to lose a record-shattering $61 billion in the fourth quarter. In response, AIG’s sugar daddy, aka  Uncle Sam, offered another $30 billion to fill in some of that hole. Good news was summarily dismissed: consumer spending, reported up 0.4% in January, the first advance in seven months, was simply viewed as  statistical white noise, the WSJ reported.  

Below, I present some of the thoughts exchanged on Twitter and StockTwits. I think it gives pretty good sense of how the day felt.

from the LOW of 1929 (195.35) the dow lost 79% of its value before it reached its ultimate low of 40.56 in 1932 (alphatrends)

reading some Biryni stuff – 2002 bull mkt, 40% of entire gain in financials occurred in first twenty days – rebuts idea that small caps lead (tradefast)

I should have guessed it’d be $AIG getting me my DOW 6k print. Wonder if betting it all in ultrashort ETFs will cover my portion of the $30B  (brycebaril)

only 3 stocks making 52 week highs today (kunal00)

Covered all of my shorts, including longs in $ERY and $DUG (still long 5k). 75% cash here. (The_Real_fly)
trade idea: if lose job have no cash flow even if job waiting immediately file for chapter 13 rid yourself of second lien, walk from house (gmrobertson)

AIG posted loss today nearly as big as the amount of money the US spends on 7.3 mln prisoners & parolees: $68 bln (nancefinance)
And courtesy of The Big Picture, a graphic image of  the S&P500 in 1996 , the Ur-period of “irrational exuberance.”


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