In Greek mythology, Daedalus and Icarus were the father-son duo who famously fashioned themselves wings made of wax and feathers to escape the island of Crete. Adrenaline pumping, Icarus ignored his father's advice not to fly too close to the sun because, heck, he was living in the moment and having too much fun. Most of us are familiar with the funereal finale to this story, with Icarus succumbing to gravity's relentless pull, his wings melted away by the sun.
What is the lesson here?
Is it "Know your limits?"
Perhaps, "Listen to your elders"?
Maybe it's "Sometimes, you just have to learn the hard way."
Whatever the lesson, we can surely find its application in our markets today. The reason being, of course, is the growing chorus of investment professionals so eager to proclaim the "Era of Crisis" over. Yes, risks remain, they concede, and it might be bumpy but it's ever onward and upward from here. Permabears got things wrong and veteran marketwatchers voicing caution are dismissed as old fuddy-duddies from a different era. According to one up and coming ex-broker, only a lonely, bitter old man would fail to see the world improving all around us, "his mind poisoned by his growing irrelevance in a world that's rapidly passing him by." Maybe. But then again, maybe we have seen this story before.
"Don't fly too high," the market-Daedaluses (Daedali?) warn, "you just might get burned." They can't tell you the exact altitude you'll run into trouble, mind you, and that's all the excuse young market-Icarus needs. He looks around, sees that he's still suspended mid-air despite lofty valuations in practically every asset class and concludes that, hey, the old man is wrong. Besides, this is too much fun - let's keep going.
And so higher he goes, off to re-learn the lessons that so many poor souls have learned the hard way over the years, in many cases multiple times. It wouldn't be so bad if he learned them with just his own money. Too bad oftentimes he's taking others' with him as well.
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