The Full Motley -- 2Q, 2021

I have noticed that the broad stock market seems especially buoyant lately, and I had assigned it to more people keeping cash on-hand, post-2008, and the increased assets within index investing. But recently I started questioning whether that is enough to make the markets be so resilient. Is there another factor? Does reduced “information asymmetry” deserve credit? With social media sites discussing finance and market movements so openly and so broadly, are we less prone to fear of falling markets? Nowadays, we see so many others celebrating the price reductions when markets fall that it would seem logical that less people succumb to panic selling. Do we have a new collective wisdom? I explained (or opined) to friend yesterday about how collective wisdom can reinforce itself, using the antiquated conventional wisdom, “stocks and bonds are inversely related.” The logic was always sound; stock is ownership and bonds are loans, so when owning stocks is a liability, then it is better to own the debt as an asset. However, that belief in this reasoning drove its results, supplying its own proof in its functionality. Nowadays, we do not see stocks and bonds moving in reverse correlation as much. That might be a hard statement to make for as little downward pressure as stocks have suffered in the past 10 years. To act on this observation, I should revise my allocations to move away from the belief that they are inversely related. However, that change will be employed at another time. For now, I stuck to my established allocations - and once again, not much movement in the market. Sure, tech stocks hit a peak in February 2021 and they started driving downward since that time, but (after years of mild underperformance) value stocks have been moving in the opposite direction, and they currently look like Darlings of the Underground Press (to leverage a song title from The Black Crowes, which is apropos on a blog entitled "Wiser Time" ). Will that favor continue? Highly unlikely.