Market Top In Ideas?
One of the classic bits of investing wisdom is that a top in a market happens when there are no new people left to join the trend. This is the bullish version of capitulation, which happens when there is no one left to get off the trend and the price falls one final time as everyone gets out of that asset no matter what the loss.
Going along with that is the curse of Business Week, in that whatever company or CEO is on the cover is heading for a bruising and soon!. This seems to be similar to a market top in that by the time the major media have heard about it and are writing stories on it, the train not only left the station, but it reached the destination and has already started back.
So suppose we take these two thoughts and apply them to the the realm of ideas. The adoption of an idea seems to follow a rough S curve, with few people adopting it at first, then it reaches the fast adoption phase which is the steep part of the curve and then eventually the rate of adoption trails off because pretty much everyone has already adopted it.
Still with me? So now we get to the point of this screed. I was at the supermarket Monday getting some lunch supplies and as I was checking out, I noticed that Time magazine had a special issue on global warming. Now I've always regarded Time as being the late to the party kid par exellence. By the time they report on something the trendoids are already moving out of it and being replaced by unhip kids from the suburbs. So if Time is all over global warming, it is just about market top in this idea.
One reason I am undecided about AGW (anthropogenic global warming) is that I am the child of two professional earth scientists (they met in grad school) and glaciation, erosion and how the land influences politics was our staple topic of dinner table conversation. In the 70's global cooling was the worry. (To give the brief version, we are in a warm blip inbetween ice ages in a fairly long cold era. As the continents move around, we have long warm and cold eras. We aren't nearly done with the cold era yet.) The consensus on the most pressing threat has changed since the 1970's, but how much is really data driven and how much is looking at a few recent terms in a very noisy data series? (And what happens if melting north polar ice shuts off the gulf stream and Europe gets colder? (That isn't a silly worry by the way.))
If global warming was a market trend I would be going short on it as everyone is now on board, so the selloff will begin soon. But the the marketplace of ideas doesn't have put options being written by a market maker. (At least not yet that I know of, but given the human propensity for gambling, give it time.)
So how do we short global warming?