Who’s fired up about record high equity prices?!

Well, you can bet retail investors are. Because from the conversations I’ve had, they clearly do not appreciate the fact that they did not suddenly become gurus in early 2009.

Or, put differently, they have virtually no conception of the extent to which trillions upon trillions of central bank liquidity is the driving force behind their outsized returns. So there is nothing to curb their enthusiasm.

It’s as though every average Joe/Jane believes that “buy SPY and hold it” is something only he/she was smart enough to think of. It doesn’t seem to have occurred to anyone that their neighbor is riding the very same benchmark to the very same promised land. And the neighbor’s neighbor is too. And the neighbor’s neighbor’s neighbor.

All of them convinced that it’s a complete coincidence that active managers just happened to stop finding alpha right when central banks started inflating benchmarks.

Read the full article at The Heisenberg Report.