I saw a piece recently heralding how one should be ready to move into enquities because a lot of investor money had been sitting out the market as was getting ready to move in, meaning that a wave of higher prices was soon to come.

I just find this idea that when prices get high it is a good time to buy to be counter-productive, and it is certainly different than how price signals normally function. Normally if money is moving into one investment it is leaving another, which means that one is becoming more bargain priced as the other is becoming over priced. This is not so much the case at the moment, but if that rule holds normally then one would think that in such a situation money should move toward the bargain priced class of assets with the idea that it has more room to appreciate than the expensive asset class. But it doesn't, the more expensive one class of assets becomes the more capital it attracts. This is especially weird when one considers that a 10% gain from an inflated amount is, of course, a much larger leap to make, and it should be considered to be harder to make.

Personally I got out of equities when the Dow was deciling and about 11,700 I got back in about 7,700 and have gotten back out again. Now I could see it index taking another jump on he basis of a couple goods reports, but I think that it then starts to feed off some of this bizarre dynamic of the expensive garnering more interest.

The troubling thing is that if people treated these price signals the way they do most things then there wouldn't be such chance of bubbles, prices would back off as soon as people recognized that they had become unreasonable. But they don't, they just want the unreasonable to become ever more so.