Eoin Treacy's view

Here is a link to the full note and here is a section from it:

What do all the theories propounded above have in common? That’s easy: they’re optimistic. Each one provides an explanation of why things should well in the future, in ways didn’t always go well in the past.

In recent years, The U.S. has simultaneously experienced economic growth, low inflation, expanding deficits and debt, low interest rates and rising financial markets. It’s important to recognize that these things are essentially incompatible. They generally haven’t co-existed historically., and it not prudent to assume they will do so in the future.

Many of the beliefs discussed above suggest we’re in a so-called “Goldilocks” environment: one that’s not too hot and not too cold.

Economic growth won’t be so strong that it brings on excessively high inflation, or so weak that it ends in recession.
Inflation won’t be so low that the economy stagnates or so high that it leads to burdensome increases in the cost of living and required contractionary interest-rate increases to cool it off.

I’ve seen times in the past when people believed such an ideal state would continue in perpetuity, but it has never worked out that way. Maybe it will this time - no one can prove it won’t until it doesn’t - but certainly broad acceptable of such a proposition indicates that optimism prevails in the current investment environment.

The biggest manias tend to have the biggest internal contradictions which everyone is conditioned to accept while the bubble is inflating but can identify as ridiculous after it pops. That is one of the most important tenets of crowd psychology to remember during the Third Psychological Perception Stage of a bull market; where bubble risk is most acute.

It is the equivalent of the emperor has no clothes and it happens in every crowded market regardless of whether we are dealing with financial considerations. For example, a man who feels like he should be a woman has just broken four world records in a woman’s weight lifting competition in Australia and a woman with “too much” natural testosterone has been told she needs to take suppressants to reduce her natural production if she wishes to compete for Jamaica at the Olympics. We are well into the realm of the ridiculous and yet the trend persists. 

It is at this stage in the cycle that we need to be most acutely aware of the consistency of trends.