Rational temperance

Bill Gross | PIMCO | 27 February 2013

"But how do we know when irrational exuberance has unduly escalated asset values?" – Alan Greenspan, 1996

PIMCO's dear friend and former counselor Alan Greenspan coined this now famous phrase in the midst of what turned out to be a fairly rationally priced stock market in late 1996. While the market was indeed moving in the direction of :dot-com fever three to four years later, the Dow Jones Industrial Average at the time was a relatively anorexic 6,000 and the trailing P/E ratio was only 12x. For a c...