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In the December newsletter (.pdf) of Absolute Return Partners written by Niels C. Jensen, he provides a detailed discussion on whether the market has reached bubble heights. The newsletter contains a large number of charts circulated through the investment community during 2013 that seem to confirm that U.S. equities are in bubble territory. Niels Jensen provides commentary to many of these charts providing a counter argument to what the chart is actually depicting. The first chart in his newsletter is the one below and Jensen notes the 2013 return for the S&P 500 is far from an outlier.

From The Blog of HORAN Capital Advisors

As shown below in another of his charts, he discusses where the U.S. market might be in terms of the equity market cycle. The chart he highlights in the newsletter is from Goldman Sachs and is specific to Europe ex the U.K. In his commentary though, he believes the U.S. market is closer to exiting the "growth phase" and entering the "optimism phase." Interestingly, the optimism phase is generally known for strong returns as investors become irrationally exuberant.

From The Blog of HORAN Capital Advisors

Might the S&P 500 produce returns in 2014 similar to 2013? No one has a crystal ball, but Jensen notes, "it is, after all, the most unenthusiastic rally I have ever experienced." At HORAN we to believe this market advance has felt like one of the longest "climb a wall of worry" rallies in some time.

Source: U.S. Equity Market Entering Euphoric Phase?