Maximum Pessimism and the Stock Market Outlook
The great investor John Templeton wrote:
"Bull markets are born on pessimism, grow on skepticism, mature on
optimism, and die on euphoria. The time of maximum pessimism is the
best time to buy, and the time of maximum optimism is the best time to
sell."
optimism, and die on euphoria. The time of maximum pessimism is the
best time to buy, and the time of maximum optimism is the best time to
sell."
Comments
Bill,
A note of caution on this idea.
I don’t think a market that had its all-time record one-day percentage gain as recently as this past Monday (October 13) is anywhere near the time of maximum pessimism.
My estimate is that the moment of maximum pessimism remains years ahead of us.
As Bill Fleckenstein said today, at that time, we’ll be talking of selling apples on the street, not of buying Macs. There is still a lot of gas in the bubble that has to be released. I think that times of maximum pessimism involve unrelenting surrender of energy and verve.
This is not to say that the market will not cycle upwards and downwards. But maximum pessimism? We have forgotten what pessimism is. (Oh, and I’m an optimist, just not in the equity sector.)