'Irrational exuberance' reaches dangerous levels on Wall St as frivolous

IT'S as if the Asian crisis never happened. Despite the global shock from the region's meltdown, poor earnings reports from United States companies and repeated dire warnings of an overvalued market, New York's stock markets continue to soar.

The devil-may-care attitude of US investors seems to fly in the face of all received wisdom about sustainable levels of bull-market runs, yet the investment mania continues. The Dow Jones set a record high on each trading day last week, finishing above 8,900 for the first time.

The index is already up 12 per cent this year - surpassing most analysts' predictions at the end of last year that last year's gains could not be repeated and that the top return this year would be about 8 per cent.

Despite the best efforts of US Federal Reserve chief Alan Greenspan and billionaire investor Warren Buffett to dampen the high spirits and introduce a more sober tone, money from the booming US economy continues to pour into equities.

Even a neutral tone set by Mr Buffett in his annual shareholders' newsletter did not do the trick. The Berkshire Hathaway guru said he was having trouble finding companies whose shares were cheap enough to buy. It was also revealed that he had sold off several hundred million dollars worth of shares in McDonald's, while turning increasingly to the bond market - on top of the well-documented entry he recently made in to another conservative investment, silver. None of those moves suggested a man who believes happy days are here to stay.

Yet investors seemed happier to find solace in the fact that Mr Buffett said nothing unduly negative.