Years ago, the great Sir John Templeton said, “The secret of my success is that I buy when everyone is selling, and I sell when everyone is buying.”

Let’s consider the optimism that exists everywhere at the moment.

Today, optimism on the U.S. equity markets has rarely, if ever, been this bullish. Two words: “All in!”

Valuations are extremely high. Forward coming returns are likely flat to negative over the coming years.

If there was ever a Sir John “sell when everyone is buying” moment, it’s now. If there was ever a time to hedge, it’s now. Down 50% to 60% remains a real risk. We may go higher… the Fed may decide to step in and buy equities. Don’t know. That’s the bet. Stay on your toes and keep top of mind that faith was bestowed on both Greenspan and Bernanke also, and that bullish Fed narrative lasted until confidence was lost.

All bubbles eventually pop.