1. Irrational Exuberance
Greenspan also said that stocks were highly priced as the result of irrational exuberance on December 5, 1996. The S&P 500 closed at 744.38 that day. It never closed below 720 after that speech. Today the S&P 500 is about 1470.
That’s a doubling in about 10 years. Via rule of 72 … 72/10= 7.2 or a 7.2% compounded annual rate of return. Not too shabby for a period that included the worst bear market in 30 years.
2. ARM loans
Suggesting that consumers might be better off with ARM loan during a speech in 2004. My guess is that ARM loans o0riginated within 24 months following this speech will experience the highest rate of foreclosure in a generation.
