More About Irrational Exuberance…

More About Irrational Exuberance…

Posted On January 21, 2021 3:28 pm

The markets aren’t moving much today, however, I still expect more upward momentum as I wrote on Friday of last week.  

In that email, I also warned about “irrational exuberance,” a term coined by Alan Greenspan in 1996.  

As a current example, I talked about Elon Musk tweeting “Use Signal,” meaning use the encrypted messaging app called Signal.

Retail inventors misunderstood and drove up the market cap of a small company called Signal Advance by 525% in a day.  From 6.3 million to over 33 million! 

That’s a stark example of what I am talking about, but perhaps more influential on the markets are the millions of people giving “stock tips” to friends, family, and professional acquaintances.  

For example, one of my readers told me about his ex-wife (we will call her Jennifer – that is not her name), who was getting stock tips from her physical therapist and her sister.  

Far be it from me to assume that Jennifer’s sister or physical therapist don’t know how to invest in the stock market, however, my reader made it clear that these tips only started amid the run-up in the markets after the 2020 bear market.  

They were both urging Jennifer to start buying stocks.  When she asked her ex-husband about it, he suggested that she only get recommendations from professionals.  

When Jennifer asked why my reader asked about the EBITDA of one of the stocks Jennifer’s sister recommended.  

Jennifer asked, “what is EBITDA?”

He replied, “That’s why.”

My point here is not to criticize or belittle anyone, it is a cautionary tale for you.  

In Options360 we trade as opposed to buy-and-hold investing.  EBITDA is not generally a factor in our decision making…

But if you don’t yet know what EBITDA is, you need to make sure that the stock “tips,” recommendations,” etc you act on come from true experts…

Not friends, family, or other non-professionals.  

When getting tips from non-experts, you need to know how to do the research for yourself – otherwise, you might as well go to vegas and get free drinks with your bets.

As they say, “don’t mistake a bull market for genius.”  That is true for professional investors and doubly true for retail investors who think “stocks always go up!”

I DO think that everyone should be in the markets.  I also think everyone should get insights and training from true professionals.  

That’s why in Options360, I don’t just give you recommendations…

I explain WHY we are putting the trade on.  

On top of that, every other week we do a training webinar to go over the model portfolio, discuss the market, and answer all of your questions. 

You get trades AND education.  

And you can get it all for just $19 if you act now. 

To Your Success,


PS. You can test-drive Options360 for just $19 still.  It’ll be the best $19 you ever spent. 

About author

Steve Smith

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.