Peak interest, people wanted to add to their portfolios, in Apple, Gold and now the Dow all comes at record highs. Apple down 37%, gold down 17%, Dow…. remains to be seen. Do markets fluctuate between being too enthusiastic and too depressed? Or is this time different?
Many analysts on Wall Street are out since the Dow high to say they have never been this bullish!
Great Excerpt from Howard Marks of Oaktree Capitol via Zerohedge.com March 15, 2013.
In the mid-1970s I was fortunate to happen upon one of the first of the time-worn pearls of wisdom that contributed so much to my education as an investor. It described the three stages of a bull market:
- the first, when a few forward-looking people begin to believe things will get better,
- the second, when most investors realize improvement is actually underway, and
- the third, when everyone’s sure things will get better forever.
In “The Tide Goes Out,” written in March 2008, several months before the lows of the financial crisis, I applied the same thinking to the converse – the three stages of a bear market:
- the first, when just a few prudent investors recognize that, despite the prevailing bullishness, things won’t always be rosy,
- the second, when most investors recognize things are deteriorating, and
- the third, when everyone’s convinced things can only get worse.