If greed is good, then these must be the best of times.
Apparently investors have never been greedier, according to Dresdner Kleinwort Ltd.s Fear and Greed Index, which measures the overall appetite for risk in the global markets.
The index hit an all-time high last month, an indication that the riskiest investments could be poised for a significant slump in the coming months, said Dresdner strategist James Montier in his most recent report on Fear and Greed.
This is evidence that investors euphoria is truly out of control, Mr. Montier was quoted as saying in the U.K.s Telegraph newspaper. Of course, this warning is likely to be about as effective as yelling cliff-edge to a herd of thundering lemming. Instead everyone is obsessed with benchmark relative risk and quarterly performance.
The index compares the value of global equities with government bonds to get a sense of just how comfortable investors are with risk. When the index is high, investors tend to be more focused on returns rather than risk. It was only last summer when the index measured zero, so in less than one year it has risen to its highest-ever levels.
Enjoy the best of times.
Then again, if the plunge last week is any indication of things to come, the end may be near.