Bullitt
Market Veteran
- Reaction score
- 72
It's been said that one should buy when others are fearful and sell when others are greedy. The underlying theory is that all the good news comes out at the top while the bad news comes out at the bottom. When things are so bad you're ready to give up, the slightest piece of bull food can spark that monster rally out of nowhere. I'm sure we've all found out at least once first hand that it's much easier said than done to buy when others are fearful in this past downturn alone. However, in hindsight, there have been times that I've gone to the well when I deemed the market to be fearful, only to be burned on the next drop. The question is: How can we, as retail investors, decipher whether the herd is in an absolute bearish selling fear or when they are in a bullish state of complacency?
Using various sentiment indicators such as TSP Talk's Weekly Sentiment Poll, the AAII bulls/bears readings, etc., an investor/trader can use sentiment somewhat to their advantage. Below is a chart courtesy of Tom that I very rarely see when it comes to 'senticators'. I'm guessing the reason being is that most 'investors' view the long term as 90 days while this chart captures the complete market cycle which could take upwards of 10-15 years.
I intend for this thread to be used by TSPTalkers in articulating what they perceive to be the current emotional outlook of the herd. This is in the hopes that all of us can find some way to benefit. I think this thread would be most beneficial if members would refrain from their own personal opinion of the market, and focus more what stage they believe the herd is currently in. I don't intend for this thread to be a silver bullet by any means but merely another tool to put on our belt.
Using various sentiment indicators such as TSP Talk's Weekly Sentiment Poll, the AAII bulls/bears readings, etc., an investor/trader can use sentiment somewhat to their advantage. Below is a chart courtesy of Tom that I very rarely see when it comes to 'senticators'. I'm guessing the reason being is that most 'investors' view the long term as 90 days while this chart captures the complete market cycle which could take upwards of 10-15 years.
I intend for this thread to be used by TSPTalkers in articulating what they perceive to be the current emotional outlook of the herd. This is in the hopes that all of us can find some way to benefit. I think this thread would be most beneficial if members would refrain from their own personal opinion of the market, and focus more what stage they believe the herd is currently in. I don't intend for this thread to be a silver bullet by any means but merely another tool to put on our belt.
Because when I looked at the chart before reading your comments, I was thinking that I'm not sure we've been through "Despondency" yet. In fact, I was thinking that maybe we are finally past "Panic" and possibly at "Capitulation." 
I like your position placement better! 
