« On PIIGS & Uncertainty | Main | Bankers' Song - We Didn't See it Comin' »

August 26, 2010

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8341c3e6353ef01348674a51c970c

Listed below are links to weblogs that reference Investor Sentiment: Stepping Back to Hope:

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Thanks

I think contrarian investing/speculation is the most reliable trading style.

This is my reasoning. Businesses, fashions, industries, countries, ideas, ideologies, cultural belief, conventions, etc etc change over time, but fear and greed are constants.

All is mutable, except the most basic instincts. And of course the market (Sp&500) always will do the opposite of the herd, in fact the historical price representation of the market is a x-ray image of how the majority lose and the minority win.

"Buy when thereĀ“s blood in the street" (Rothschild)

Kent @ The Financial Philosopher

Thanks:

I agree; however, I would inject the word "eventually" when you say the market will always do the opposite of the herd!

"The markets can remain irrational longer than you can remain solvent." ~ John Maynard Keynes

As always, I appreciate the comment...

Kent

Thanks

yes, "always" was a bad word.

But I will introduce a nuance. I think (and I work with this) that the time the herd can remain irrational in the upside, can be a very long time, cause greed is a slower emotion than fear. When people is greedy they are couting the new coins in the pocket everyday.

Also, irrational behavior to the downside are very quick, fear is panic, fast, people run.

So, in my opinion, cause these two emotions are of different speed is more reliable to buy the market at a bottom than the market at a top, cause detect panic is more evident than detect greed and complacency.

Regards

Kent @ The Financial Philosopher

Thanks:

Agreed! On your note, here's another quote:

"Fear tends to manifest itself much more quickly than greed, so volatile markets tend to be on the downside. In up markets, volatility tends to gradually decline." Philip Roth

Jan

Personally,
I think the big people on wall street make their money on either side of the coin. They make the most when we all buy and sell.
Sitting tight and hoping the bed bugs don't bite. I don't NEED the money for five more years- but it will be painful to watch despair reign on the heels of Glen Beck. (He sells gold.)

Guild Wars 2 gold

I fully agree with the author's argument.Fear tends to manifest itself much more quickly than greed, so volatile markets tend to be on the downside. In up markets, volatility tends to gradually decline.

Kent @ The Financial Philosopher

Jan & Guild:

Yes. The institutional investors look to make money when the investor crowd moves (in either direction). In essence, the big players use the smaller investors as tools.

By not allowing emotions to govern your investing behaviors, you cease to be a tool for money and the markets; you are enabled to use money and the markets as a tool for your own life...

Jim Cosgrove

Three months? One year?
I don't have a clue. Prices fluctuate.

Personally though, I think we're in a period not unlike 1929-1949 or 1966-1982. I have a "glass half full" view; the platform for the next (global) wave of prosperity is being built. This is going to take a while, but in 10, 15, 20 years I think we'll look back and ask, "Why didn't I risk up?" "What was I so afraid of?"

Short-term, anything can happen. Long-term I'm Hopeful to Optimistic.

Kent @ The Financial Philosopher

Jim:

My sentiment closely matches yours. It seems we have three to six months to scrape the bottom (or find a new one). From there, a new foundation for the next growth phase will take years to create and build upon.

As you said, "short-term anything can happen. Long-term I'm Hopeful to Optimistic."

The comments to this entry are closed.