I find this almost hilarious. Several well known commentators have come out with a recent piece warning that there is extreme complacency in the stock market, and a top is forming soon. They go on to suggest that one should protect themselves by buying bonds.
First off they are kidding themselves if they think there is complacency in the stock market. The ROBO ratio is still at levels usually only seen at intermediate degree sell offs. This is the ratio of retail put buying to call buying. The most clueless traders are buying puts at a feverish pace. Does this sound like complacency?
On the other hand they suggest buying bonds. Bonds have been in a 36 year bull market. This has gone on so long that in most of the world we now have negative interest rates. Think about that. You are paying a bankrupt government for the privilege of loaning them money. This has to be the most illogical concept imaginable, and I would say a sign of the most extreme complacency, maybe ever seen in history. Yet these analysts feel that stocks are ready to collapse, so you should buy bonds.
Seriously you can’t make this stuff up. This is how illogical traders get during bubbles. Common sense just goes right out the window.
I have news for these guys, the bubble isn’t in the stock market.