"Put it in the books!," says the excited radio play-by-play man Howie Rose after the last out is made in each glorious victory by the New York Mets, America's Team.
"Melt-up" also belongs in the books. Not the baseball record books, but dictionary books.
Bloomberg reported that melt-up hasn't made the dictionary (as of yet) because the term is in the eye of the beholder. Melt-up is the word used by traders to describe a stock market rally fueled by sentiment, rather than valuations, explained Bloomberg on April 26.
A melt-up is when "market optimism has come untethered from fundamentals and investors are chasing returns by jumping on an upward-moving bandwagon."
On-the-fence investors, who are waiting for a break in the melt-up so they can buy on the dip, are out of luck. A dip isn't coming as momentum, fueled by anxious stock buyers worried about losing out, drives prices higher and higher.
And of course, all things must come to an end. The panic buying, which is the last stage of the melt-up, ensues.. The melt-up then shifts to meltdown mode, a stock market version of the Chernobyl nuclear disaster.
Larry Fink, CEO of BlackRock Inc. thinks the current market may be experiencing a melt-up as investors, who got hammered by the sell-off late last year, return to recover their losses.
What's the difference between a "bubble" and melt-up? A melt-up may be viewed as a pre-bubble when stock prices are way out of line with corporate sales and earnings. If sales/earnings catch up to prices, there's no bubble. Congratulations. You are the smart money that caught the wave and rode it higher.
A melt-up preceded the dot-com bubble of 1999 and 2000, when prices soared and earnings growth (or a complete lack of earnings) fell far behind increases in stock prices.
There is a warning sign that the melt-up is headed to bubble territory. if you see any any sock puppet advertising, like the spots featured from the dot-com bubble poster child, Pets.com, head for the hills.
Pets.com became Pets.gone.