Prof. Jeffrey Wurgler's research on investor sentiment
– November 15, 2013
Excerpt from The Wall Street Journal -- "One implication of their research is that it is important not to rely on our memories when comparing different periods' sentiment levels. Not only are our memories short, we also tend to rewrite history to make the past appear different than it really was. If you are basing your investment strategy on swings in investors' mood between bearish and bullish extremes, it pays to rely on objective measures and a long-term perspective. Messrs. Wurgler and Baker developed five indicators that were well correlated with periods of speculative excess over the past 50 years. None of them currently is detecting the levels of exuberance that prevailed at the top of the Internet bubble."