Thread by @TimmerFidelity

Sentiment. It finds its way into a lower ERP, as it did at the secular peak in 2000, but we can also measure it through investor behavior. (THREAD)

We know about speculation in meme stocks & non-profitable tech this cycle. Margin debt has growth dramatically on a year-over-year basis, although as a percentage of market cap, margin debt remains well below the peak in the 2000s. /2

With retail speculation presumably limited to a relatively small subset of the market, looking at long-term flows--that is, regular investors saving for retirement--we see very little evidence of exuberance. /3

Since the financial crisis, just $291 billion has flowed into US equities through mutual funds & ETFs. That’s less than 1% of the $38 trillion US market cap. In contrast, $3.2 trillion has flowed into bonds. There may be a bubble in bonds, but I don’t see one in stocks. /4

While there have been pockets of exuberance and speculation in the markets, as a 36-year veteran of market cycles, I just don’t see the bell-ringing signs that the market as a whole has reached a sentiment extreme. /END