Less quantitative, but unsettling nevertheless, is the tawdry aura enveloping the financial masters of the universe as they pocket huge sums of money and spend with abandon on everything from fast cars to palatial homes. The excess of the 1980s are beginning to pale next to the tales of conspicuous consumption commonplace in New York and other financial centers. A peculiar dynamic is at work. Professional investors are taking home rich pay packages even as most do far worse than the stock market. Deeply anxious, even desperate, these money managers are chasing the market at prices many believe are too high.
Momentum is everything.
Conviction is scarce. Time horizons are fleeting. All this means ever greater bouts of market volatility lie ahead of us.