Welcome to the euphoria economy

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In the new Roaring Twenties, the market for everything from lumber to Bitcoin seems to be going "to the moon," said Akane Otani and Michael Wursthorn at The Wall Street Journal. "Rarely have so many assets been up this much at once." Stocks are "on a tear," the housing market is the hottest since 2006, the average valuation for startups has never been higher. "The frenzy has extended beyond conventional markets" into digital currencies; the price of Bitcoin rose above $60,000 earlier this month. "Congress approved trillions of dollars of stimulus to help the economy recover," and the Federal Reserve has kept interest rates near zero. Now economic activity is "rebounding and markets are soaring." But the "excessive exuberance" could be creating bubbles similar to the dot-com boom and bust.

The money just keeps coming, said Dion Rabouin at Axios​ — last week the flow of new money into the stock market hit a record $56.8 billion. Investors used to get spooked by long bull runs. But there seems to be "a sea change in psychology" among today's investors, who have "shifted to risk in a big way." So strong is the appetite for stock gains that a public holding firm that operates only a small deli in rural New Jersey reached a market capitalization recently of $113 million. That doesn't mean the markets are broken, said Barry Ritholtz at Bloomberg. Like other silly and overinflated companies, the deli trades over the counter via the so-called pink sheet, where the shares of "dozens of tiny companies change hands at absurd valuations." Don't draw broad conclusions based on that market alone.

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What's worrying is how many investors have never experienced a downturn, said Mark Hulbert at Market​Watch. A recent survey from Charles Schwab found that "15 percent of respondents said that 2020 was the first year they entered the stock market." Schwab called them "Generation I," which is fitting, because many of them have been making so much money they feel invincible. These newcomers have been quick to ridicule the veterans for being bearish, but older investors "recognize when the market is skating on thin ice."

Indeed there's a generational difference here, with shifting attitudes toward work and life fueling a sense of euphoria, said Kevin Roose at The New York Times. There's "a feeling that the economy is changing in ways that reward the crazy and punish the cautious," and it extends well beyond the stock market. Young workers have grown "emboldened by rising vaccination rates and a recovering job market," and by "bank accounts fattened by a year of work-from-home savings." This "daredevil spirit" is even inspiring more people to leave lucrative, stable jobs to live the dream. The rallying cry of the movement is "YOLO" — "you only live once." The expression has gained wide currency among day traders, "who use it when making irresponsible bets that sometimes pay off." But it has since morphed into an ideology capturing the imagination of workers who feel bored and stuck in their jobs. For some of them, "stasis is the problem, and the only solution is radical change."

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