Business Spectator - WEEKEND READ: Fearing fear itself
Whether this turns to be true should be apparent in a week or two. Or, at most, in a month or two.
Anything is possible. Interesting how emotions cloud what is really going on. There is panic almost everywhere. Even if the indexes go up that might be translated as a relief rally. A few of the late ones were already. That is a sign of low morale. Many don't even care to miss the recovery now. As long as there is no more suffering.
So, that is the element that makes people less prone to succeed in financial markets. Of course, if one expects to make money on other people then she should not think and act as those others.
The most crucial indicator of an end to the rising fear may be, counter-intuitively, more of it. Students of bubbles note that investor sentiment is always most bullish when a market is about to hit a top and most bearish just when it's about to bottom. (Business Week's 1979 cover story on the "Death of Equities" signalled the start of a long-running stock-market boom.)
But when there's nobody left to lose confidence, when Jim Cramer, the ultimate stock guy, throws in the towel and urges people not to buy stocks again until 2013, that sure smells like capitulation.
Whether this turns to be true should be apparent in a week or two. Or, at most, in a month or two.
Anything is possible. Interesting how emotions cloud what is really going on. There is panic almost everywhere. Even if the indexes go up that might be translated as a relief rally. A few of the late ones were already. That is a sign of low morale. Many don't even care to miss the recovery now. As long as there is no more suffering.
So, that is the element that makes people less prone to succeed in financial markets. Of course, if one expects to make money on other people then she should not think and act as those others.
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