What followed has been one of the greatest periods of economic expansion, and one of the greatest Bull markets of all time. It shows how commonly held beliefs about the way things are and will be are often turned upside down with time. It also shows the human tendency to reach extreme conclusions and then invest in them. Finally, it shows how important it is to diversify one s investment portfolio against this tendency. Twenty years later, you could almost write the article in reverse.
Stocks are the cornerstones of most investment programs for institutions and individuals alike.
An entire industry has sprouted to allow individuals to trade their own accounts, MTV and music videos have been eclipsed in popularity by CNBC and market commentary, and many investors use a mirror when they want to see a picture of their favorite money manager. As value-oriented investors, much of our own thinking, which is based on historical fundamental relationships between price and earnings or cash flow, and between risk and return, has been challenged by this market environment. We are philosophically both contrarian and opportunist. We are avid students of market history and human nature, and enthusiastic participants in the current economic boom. At every market top, the maximum number of people will tell you that the world has changed, things are different and valuation levels are justified.