For quite some time now I’ve known that I successfully inherited elevated cholesterol levels. I began to learn the positive ways I could control this with exercise and improved diet (it is amazing the high correlation between my favorite dishes and high cholesterol.) It didn’t take long, honestly, to learn what things I could do to truly improve my health. Funny, though, it took far longer to change my habits and my diet once I learned what I should do.

This came to mind again this week when I was reminded that Monday was the 15^th anniversary of the “Irrational Exuberance” speech by former Fed Chairman Alan Greenspan. It was December 5, 1996 that he warned of the high stock prices relative to earnings. The price people were willing to pay for stocks (Price to Earnings) was, even then, at historically high levels and he was ringing the alarm. He was right. Even so, the S&P rose 105% more over the next 4 years before the bubble popped and the downturn began.

The bottom of the market during this last “great recession” appears to have been in March of 2009. Opposite 1996-2000, stock prices were at historically low levels. Smart investors, of which Warren Buffet was particularly vocal, began to say that prices were wonderful and that it was a great time to be an investor if you had a longer term time frame. Here we are nearly 2 ½ years later and stock prices continue to be particularly low compared to earnings by historical standards. The economy is growing, albeit slowly. Corporate health, balance sheets, and cash flow – particularly of large US companies – are at excellent levels. Yet pessimism abounds.

In the same way the pendulum continued to swing toward market enthusiasm for 4 years after the warning in 2006, the pendulum is swinging toward pessimism today. Sure, I’ve been accurately accused of being the optimist. Yet there certainly are a lot of smart people arguing good reasons why the pendulum will likely turn and begin swinging the other way again.