The late great investment manager, Sir John Templeton once said “Bull-markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” Euphoria is the final and most dangerous stage of the bull market. This is when the investing public moves all in on stocks.
Has the bull market entered euphoria territory? It would seem that way. Investor sentiment has surged since the election. Our chart shows the spread between the percentage of respondents to the Conference Board’s consumer confidence survey who think stocks will be higher in twelve months and those who believe it will be lower in twelve months.
This is the highest net bullish reading in well over a decade.