Posted on 12/29/2009 11:14:32 AM PST by BenLurkin
John Templeton's observation that bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria might never have been more apropos than it is today.
There are many pieces of Wall Street wisdom, some work, others don't, but John Templeton's quote is one to remember. In fact, it may be the single most important and most profitable principle for investors.
History shows that this principle is as easily forgotten, as it is simple. That's probably what makes it so effective. Investors, in particular fund managers and analysts (more about that in a moment), should frame John Templeton's advice and display it prominently, or use it as screensaver.
The reason we talk about investor sentiment is because it has reached extremes not seen in years. Couple this with a 65% rally in the S&P (SNP: ^GSPC), Dow Jones (DJI: ^DJI) and Nasdaq (Nasdaq: ^IXIC) and you have a possible recipe for disaster.
A bittersweet privilege
21st century investors had the bittersweet privilege of eyewitnessing the bust of several bubbles. Even though the bubbles all occurred in different asset classes, they had one common denominator - sudden and unexpected destruction.
A balloon that has been punctured does not deflate in an orderly way. That has been the case with technology (NYSEArca: XLK - News) in 2000, real estate (NYSEArca: IYR - News) following its 2005 top, and the broad U. S. stock market (NYSEArca: SCHB - News), which topped in 2007 and tumbled in 2008/2009.
If you are one of the lucky few investors who foresaw all those asset bubbles, there is no reason to continue reading, if you aren't, it might be a good opportunity to reevaluate following the guidance that didn't keep you out of asset bubbles.
(Excerpt) Read more at finance.yahoo.com ...
I’m sure 2010 will be every bit as “good” as 2009. Maybe even “better”.
;-)
It wasn't unexpected to Peter Schiff and several others.
Double Plus Good!
Depends on the definition of “good”,,,
Carter style stagflation brought to us courtesy of Carter II.
Ahem, maybe worse than that.
U.S. Economic Disaster Worse Than Weimar or Zimbabwe
Who knows for sure?
Hmm. Solid B+?
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