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If you remember the TV show Alice from the late 70s you probably remember the character Flo whose tag line was kiss my grits. I couldn't find a picture of Flo that was funny enough so I went with the sign that was supposed to be for the restaurant.

Earlier this week I had a post about recent MLP IPOs and whether they might be a sign of a maturing mania. Seeking Alpha re-ran that post and it drew a lot of comments with a surprising tone to several of them. To read through the comments there would appear to be very little regard for risk.

In my post I talked about being able to get plenty of yield (for anyone wanting to concentrate their portfolio in that way) without putting 20-25% in MLPs, I mentioned allocating to various yield products to build a yield. Several of the comments however revealed investors with far more than the 20-25% in MLPs that I think is way too much. Here was the most interesting snippet from all the comments:

I'm over 50% in MLPs and have been for quite awhile. And within the MLP universe you can be fairly diverse.

I was really surprised to read that, really surprised, and I would add there were other comments that were kind of in the same ballpark. The comment excerpted above acknowledged the need to keep close tabs but we have all seen the sentiment from the excerpted quote before. To me it was the same as being diversified by owning a search engine, a web hosting company, an etailer and a B2B company.

There was also this comment:

My fairly large portfolio is 35% in REITs, 23% in BDCs, 21% in MLPs and pays me 10% annual dividends. I don't really give a "feather or a fig" about the risk involved!

Holy cow.

In the last 42 months the market is up more than 100% and while there have been a couple of small declines along the way, the move since the March 2009 low has been huge and based on the comments it has inspired a willingness on some portion of the investing public to eschew risk (I realize how unscientific a comment thread left on one blog post is).

I do believe the comments on blog posts can capture a sentiment that exists. Four years ago after a large decline there were many emotional and irrational comments left on my posts and I view the above as just as emotional and irrational after the market has doubled.

In December 2008 I wrote a 2009 outlook piece called Expecting a Massive Rally which drew 100 comments. Most of them were along the lines of "Dream on! There will obviously be tradable bounces in any market, but this one has no chance of a solid long term rally" and "Well the $CPC and ISEE are both at levels of market tops, so sorry Rog, the market is about to CRACK" and finally "These guys have been calling bottoms all throughout 2009. They have been wrong all along. But we're supposed to buy it this time?"

The intention here is not to call a top as Bernanke has actually commented about the stock market making people feel better but the excitement in the first two excerpted quotes is a behavior that we've seen before and often it has hurt people. It is the same type of psychology that causes people to buy high, sell low and end up grossly overweight the wrong thing at the wrong time. There may never be a consequence for being more than 50% in MLPs, right here right now that is unknowable, but there are certain behaviors that if recognized and avoided allow for a much better chance for long term portfolio success.