Key points are as follows…
- At extremes the investment crowd is invariably wrong. Everyone who wants to buy will have done so and the only way is down (or vice versa in crowd panics).
- The trouble with crowds is rooted in the lapses of logic observed by individual investors.
- Investors are best off taking a contrarian approach – buying into assets that are unloved by the crowd and undervalued and selling assets that have become over loved by the crowd and overvalued.
- Right now investor sentiment seems to be cautious to neutral when it comes to shares. Not so for bank deposits which still remain very popular.