Euphoria
A state of widespread optimism in which risk is discounted and price rises are treated as normal.
How it is identified
Test: rising participation, leverage and new issuance combine with a narrative explaining why traditional valuation no longer applies
Unit
qualitative
In depth
Euphoria's markers are behavioural rather than numerical: heavy retail account opening, leverage rising, new issues pricing aggressively and completing easily, and confident explanations of why a valuation measure has become irrelevant. That last one is the most reliable marker, because it is the argument required to justify prices that traditional measures cannot. Like every sentiment state it is identifiable at the extreme and ambiguous elsewhere, and extremes are usually only clear afterwards. Nothing here suggests that any current condition is euphoric or that any market will fall.
Worked example
New issues in a quarter are subscribed an average of 60 times, retail accounts open at a record rate, and a widely repeated argument holds that earnings multiples are the wrong measure for the current era.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Euphoria” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.