illusion friday, page-74

Novac, I agree that the fundamentals seem quite dismal, so shouldn't the market be tanking now?

I'm either missing something, or the bad news is already discounted.

I bought some shares in Lloyds TSB just after the big rights issue. The people I talk to over there said I was absolutely insane, but as it turned out the sp was already discounting the bad things they were telling me about.

Another thing that bothers me is that there's an absolute mountain of money sitting on the sidelines which could really move markets if it starts to go in.

This also argues that institutional and portfolio investors are already quite well protected, so there's more incentive to buy if the (market) bears are wrong, than to sell if they're right.

My recollection is that most investors were fairly fully invested before the big crash, which I don't think is the case now.