Consider gold and housing: two very different markets, yet each experienced a mania within the past decade.

 

In 2005, the housing mania was red hot. Prices had been soaring for years; many owners used their homes as ATMs. Manic optimism led people to believe the rising price trend would continue. On June 13, 2005, Time magazine published a cover with the title "Home $weet Home," and a picture of a smiling man hugging his home.

 

The July 2005 Elliott Wave Financial Forecast noted:

 

There’s no mistaking it now: The extreme psychology of the Grand Supercycle peak has taken up residence in real estate. The public demand for periodically illiquid pieces of property is an eerie facsimile of the zany excitement for stocks in 2000.

 

The housing market topped months later.

 

As for gold, this chart chronicles the rise of yellow metal mania before prices peaked in September 2011.

 

 

 

Since topping at $1921.50, gold has lost about a third of its value.

 

Now consider today's historically high sentiment toward stocks.

 

The April 2014 Financial Forecast says:

 

Newsletter writers’ optimism dwarfs that of the two prior peaks in 2000 and 2007 ... A historically broad consensus of market advisors is convinced that the Fed-induced credit expansion will continue, propelling the stock market to ever higher highs.

 

Now is the time to get EWI's perspective on the U.S. stock market.

 

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