The Strategist

JPMorgan Barometer shows maximum complacency of investors in 20 years

02/17/2021 - 02:48

"The JPMorgan Barometer", which assesses stock market dynamics, showed the highest level of investor carelessness since the dot-com crash. As long as investors are driven by greed rather than fear, the bank's strategists do not expect a significant pullback in the rally.

JPMorgan's investor complacency index, which is based on valuations, position sizes and stock market price momentum, is near its highest level since the dot-com bubble burst and companies realized that spending money faster than you make it is not efficient, Bloomberg said.

Today, global investors are experiencing the least fear in two decades and their level of greed is off the charts, Bloomberg notes. That was shown in the first weeks of 2021, when the bitcoin exchange rate approached $50,000, investor craze for marijuana stocks reached a climax and speculation wars over penny stocks began, the agency tells. 

Since the beginning of the year, the capitalisation of the world's stock markets has risen by $7 trillion, the market value of cryptocurrencies has reached $1.4 trillion, and issuers of high-yield bonds have raised record sums.

All of this raises concerns about unsubstantiated valuations across asset classes, but investors continue to pump money into them in full confidence that unprecedented monetary and fiscal stimulus will "extend the party" for a while longer, the agency writes.


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