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.

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