I concluded last month’s Strategy Thoughts with; “Investors should remain sceptical of this current bounce, and myriad of comforting economic forecasts. There will be another great long term buying opportunity, but we weren’t there last October and are certainly not there now.”

Since then, despite markets meandering sideways to down, attitudes, expectations and hope have become even more inflated. This edition of Strategy Thoughts reviews some of the evidence for this increase in risk appetite and examines what history indicates it may mean. It will also question the trend of investors shifting their attention away from the US market, that has certainly out performed globally since the GFC, in favour of international markets, and whether international markets may offer a reasonable alternative if a major bear market lies ahead for the US.

But first I will review what ‘cycles in investor attitudes to risk’, a phrase popularised by legendary investor Howard Marks, may be telling us, and also what risk actually is.