A Frog in My Throat?

Someone stuck a knife in my neck last week. Fortunately for me, he was a qualified surgeon. Fortunately for him, I had signed a consent form.

I was told ten days ago that I have a gland in my neck that was misbehaving: producing too much of a hormone which was making me tired and my muscles ache. The biological evidence suggests that the gland started misfiring some years ago, maybe as much as a whole decade. It’s amazing what one will put up with in terms of discomfort – and even think it is natural – if it comes on slowly enough that you don’t notice a specific change. Rather like the frogs that business guru, Charles Handy, wrote about some years ago. Supposedly, a frog will let you boil it in water without jumping out of the pan, if you turn the heat up slowly enough that the frog never notices the difference.

Happily, I’m not quite as dumb as a frog. A few weeks ago, I realised that a visit to my GP was in order.

But the experience has made me think, once again, about those in the financial markets who don’t see the over-pricing of assets even when it appears to be staring them in the face. If the market isn’t over-priced on a particular day, there’s no reason – absent a massive surge – to think it is on the next day. So, at what point do you say: “Prices are too high”?

The answer is that the market, rather like my misfiring gland, probably doesn’t go from good to bad on any one specific day. But there comes a point when we can look at how things are today and how they were at some point in the past and realise that the change can’t be justified.