In The Lonely Bull

After an extended period of placid markets, a return to volatility is jarring.  However, the placid period was more out of character than what we are seeing now. 

Markets normally overshoot optimism as well as pessimism. 

News items are sometimes accorded far more importance than turns out to be the case.  People are gregarious, and their emotions feed off each another.  That is one reason why, even though situations vary, human reactions are somewhat predictable.

Good investors learn to use these characteristics to their advantage. 

Buy when others are selling or sell when others, in euphoria, buy without consideration to value, are just two examples.  There are others, more subtle, that still play on typical human impulses.  The current period is characterized by many investors sitting on large gains after several good years.  Even though favorable economic conditions continue, these investors are nervous remembering prior sell-offs; they are quick to sell.  This too will pass. 

Fundamentals are the best guide and they remain good; stay steady my friends.

The Lonely Bull

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