New York, New York (PressExposure) October 16, 2009 -- Irrational exuberance has returned to the equity markets - that's the view from Asian-based investment brokerage, "Mann International".
Sources close to the firm say that global equity values do not reflect the condition of the global economy and valuations are more indicative of the unprecedented levels of liquidity pumped into the financial system by the world's central banks in an effort to re-inflate asset values virtually destroyed by the credit crisis.
"Mann International" believes that equities are advancing largely due to investors being swept along by the herd mentality. Analysts at the firm suggest that much of the recent gains are primarily the result of late arrivals in the form of retail investors because many institutional investors are selling into strength and that, eventually, selling pressure will overwhelm buying activity.
The DJIA surged after better-than-expected Q3 results from JP Morgan Chase which reported strong performance from its fixed income business. One of the "Mann International" sources suggested that investors needed to be mindful of the fact that the relaxation in the mark-to-market accounting rules gave banks a certain degree of poetic license with regard to the valuation of toxic assets that remain on their balance sheets.
The firm has issued a warning to its clients advising them to remain cautious of entering the markets at what could eventually be looked back upon as a high point.