Fools Rush In

“Americans seem to be falling in love with stocks again,” leads Nathaniel Popper on The New York Times front page. Yep, Joe and Josephine Lunch Bucket are back to putting money in stock mutual funds.

Mr. Popper quickly mentions what we all know.

While the rising market may lift the nation’s collective spirits, it will not necessarily restore everyone’s portfolios. In good times and bad, many individual investors tend to buy and sell at precisely the wrong moments. They dump stocks after the market falls and buy stocks after the market rises, the opposite of what investors aim to do.

It’s not like this party is just getting started. The S & P is up 120% since bottoming during the dark days of March 2009. The Fed has provided the cheap fuel and the pros have been ramping up the market ever since. The market has climbed multiple walls of worry: Europe, debt ceilings, elections, tax uncertainty. You name it, but now the coast is clear. “The last few weeks represent the belief that there will be no existential threat to any large global economy in 2013,” said Nicholas Colas, the chief market strategist at BNY ConvergEx group.

It’s like Mr. Colas is auditioning for that old show, “Make Me Laugh.”

Meanwhile, Grant’s Interest Rate Observer reports of a new financial product from Deutsche Bank. The “U.S. Short Squeeze Index” which gives institutional investors a share in the gains from 25 heavily shorted stocks.

Everyone seems to betting the same way. Can everyone be right?