Exuberance and rising stock markets

January 28, 2013 | 4 comments

The stock market in the USA has been on a bull run for five years now, and market watchers are wondering when it will end, and how badly.
There was an illuminating article published last week on CNNMoney, titled, “Bull market winding down. Don’t panic” that outlined the four stages of a bull market.
  • Reluctance
  • Consolidation
  • Acceptance
  • Exuberance


According to this article, we’re currently in the “exuberance,” stage. How long it will continue is anyone’s guess.
Remembering Alan Greenspan’s remark about “Irrational Exuberance,” preceding the devastating dot-com crash of 2000, the word “exuberance,” can create sensations of cramping discomfort, fear and panic in the mind of a market investor who suffered that crash.
I remember the crash of 2007. What stocks I owned plummeted along with everyone else’s. They were down 40% in a blink of an eye. I’m typically quite calm about such things, but after watching the hemorrhaging I called my investment advisor one day in bit of a panic and wondered out loud if I should sell everything and bail out. He reminded me that I had not invested on emotion, on expectation of short term gain or on a whim. We had intelligently looked at the options, invested for the long term, made wise choices, and had bought into sound companies that survive the tough times. He was correct, and I didn’t change a single investment. I let go of my fear and trusted that all was well. Over time, every investment recovered handsomely, and went to new highs, and I was grateful I heeded his advice.
What I’ve learned is that exuberance and fear can be opposite sides to the same coin. If our investment decisions are based on either, we’re setting ourselves up for a fall. They are blind states of reason that lead to poor decisions based on short term expectations that may or may not work out, and irrational speculation that is not grounded in sound financial principles.
So, if you’re wondering about investing in the stock market, be sure your motivation is sound and not simply being carried away by the “exuberance” of the moment. Through the parable of the talents Jesus rebuked the unwise investor who buried his unused talent in the ground and praised the investors who made profitable use of their talents. So, there is a spiritual imperative to make wise use of the resources trusted to our care. But there is also a spiritual imperative to never be influenced by greed or lust.
I cherish these words of Mary Baker Eddy to members of her church, from the Church Manual,
God’s Requirement. God requires wisdom, economy, and brotherly love to characterize all the proceedings of the members of The Mother Church, The First Church of Christ, Scientist” (Man. 77:18).


4 thoughts on “Exuberance and rising stock markets”

  1. Evan, thank you for this practical view on investing. I love Jesus’ parable on the wisdom of investing and agree with you that it is wise to guard the resources in our care, and wise to invest in good companies that provide jobs and services, As we take care of our bodies with wisdom (spiritual attention mostly) so should we approach our finances. Going to God and listening for His direction takes the emotion and hype out of human decisions and leads us into the calm clear waters of prudence, wisdom, and brotherly love. And everyone is blessed.

  2. I know very little about investing, although I do invest. To keep one’s money only in the Bank will never really increase one’s financial worth. But the prayer that I do is to know that the financial adviser that I pick is honest, compassionate to my needs, and to have a more than customer/advisor relationship. This I have for way over 20 years. But the most important prayer to remember is that God is at the helm of the whole works, AND TO TRUST IN THAT.

  3. Glad you held onto your stocks for the roller-coaster ride. I’ve found it usually wisest to think of stocks as long-term investments.

    Also, I’ve found it best to not invest anything in the stock market that I truly can’t afford to lose. It’s always somewhat of a gamble, but you have to weigh that against the sure erosion of inflation if you choose FDIC-insured CDs instead.

  4. Oh I love your reminder about Jesus’ parable of the talents. And also from the Church Manual on God’s requirement written by Mary Baker Eddy that each member of her church conduct all proceedings through wisdom, economy, and brotherly love. Just came at the right time because last night I’ve been reading news in my country with the intention to pray, respond to the needs and oh buoy I almost didn’t know how to pray about it. But then it came to me to start with God and what Mind knows. After that I felt I can trust Mind to unify all men and nations. Your blog here encourages me more when you said “…there is a spiritual imperative to make wise use of the resources trusted to our care.” I have that duty to wisely use the talents I have been learning even through your previous blogs. With unceasing thanks Evan, including TMC and all of its members activities where help is from one to the other.

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