Investors Beware: Stock-Market Manias Can be Contagious, Warns Expert

Stock-market manias are running rampant, affecting all stocks in the market and putting ordinary investors at risk of getting swept up in the frenzy. Francois Rochon, a seasoned investor, has sounded the alarm on the dangers of the “index waltz,” where fund managers rush to buy booming megacap stocks.

As investors flood into the market, buying high and potentially selling low, Rochon warns that the music for the “index waltz” will eventually stop, as seen in previous manias. He advises tempering euphoria for the biggest stocks in the market, especially large-cap growth stocks like the Magnificent Seven, which are currently leading the mania and leaving value stocks in the dust.

Rochon points out that even popular investment options like the Vanguard Value ETF have underperformed compared to the Vanguard Growth ETF. However, he emphasizes that dialing back on euphoria doesn’t necessarily mean getting out of the market entirely.

Investors have the choice to keep dancing to the index waltz, but they should be aware of the risks involved. Rochon’s advice serves as a cautionary tale for those caught up in the excitement of the market frenzy. As the mania continues to spread, investors would be wise to exercise caution and resist the urge to follow the crowd blindly.