Extreme gloom, a very dismal outlook, and scrambling out of the market, prevails, not confidence and recognition of the bargain stock prices. Not surprisingly, it's just the opposite of the confidence pattern and attitude toward stock valuations at the tail-end of bull markets. History shows that as bull markets get close to their tops, and already high stock valuations become even higher, confidence that risk is low actually increases, usually because surrounding conditions look so super that the bull market should just last forever. What a problem. Risk is lowest and stocks are on the bargain table when gloom and doom prevail, when confidence to buy is at its lowest.
Risk is highest and stocks the most over-priced when optimism and confidence prevails.
So, let's not watch for investors to be full of confidence, and anxious to get back in to snap up the bargains, as signs the bear-market bottom is in. I may be wrong, but the recent degree of willingness to jump back in, particularly into the same hot stocks that caused the problems in the first place, has been a confirming sign to me that, while I called for a significant rally, odds remain high that it's only a bear-market rally that will end as the market's unfavorable seasonal period takes over. Mr. Harding has been consistently ranked in the Top Ten Timers for years. In Riding The Bear, Mr. Harding reveals that while many Wall Street pros urge investors to hold steady during market declines, these same Wall Street pros and institutions sell quickly at the first sign of a market turning.