Not to worry anyone, but the phrase “irrational exuberance” keeps cropping up inconversations with investors.This is not normal, and not a great sign.
The famous term was apparently dreamt up in the bath by former FederaReserve chair Alan Greenspan, and unleashed in a televised speech he delivered in 1996. At the time, the ill-fateddotcom bubble was in full swing, withshares of dozens ofuntested, unprofitable tech companies soaring to the moon,often on theflimsiest ofrationales.“Lower risk premiums imply higherprices of stocks and other earningassets . . . ,”Greenspan said on that fateful day. “But how do we know when irrational exuberance has unduly escalated asset values, which then become subjectto unexpected and prolonged contractions as they have in Japan over the past decade?” Markets dropped sharply inresponse to what was clearly, in retrospect, an early skirmish in the ugly market collapse in the following years.
The Wall Street Journal：Talk of ‘irrationalexuberance’ buildsin frothy US stocks.pdf-size0.13GB
