Uncertainty continued to pick up followers yesterday, and Euphoria continued its hasty retreat into the sunset on Thursday, with the Internet stocks feeling its loss the most. The sentiment twins Euphoria and Gloom, while extreme in their behavior and frightening to those caught on the wrong side of them, are periods during which a profit is readily available to those who are aligned with them. While Euphoria and Gloom capture the hearts and minds of investors and the press, it is Uncertainty which is the deadliest of the three siblings.
Uncertainty is the period between trends.
It is a period during which investors, while aware of the changes that lie ahead, are still partially hypnotized by the bright lights of the long resident but recently departed prevailing trend of yesterday. It is during this period when investors, aware that a turn must be made but happy with the direction they have been traveling, often see the profits made during the previous run slowly whittled away as indecision slowly turns to regret. The initial stage of the period of Uncertainty is a time when conflicting signals intertwine and compete for attention. The old is juxtaposed with the new, with the competing forces of yesterday and tomorrow firing off a rapid succession of invitations to join their party. As we enter a period of change, try to stay focused on what is to come rather than what has already passed.