CHAPTER 15CONTRARIAN ANDSENTIMENT INDICATORS

Sentiment indicators measure what groups of investors are doing. (Not saying—doing; talk is cheap. I always—always—watch their feet, not their mouths.) Since most groups of investors are trend followers, most sentiment indicators turn bearish when the crowd is bullish, and the media is bullish, and all the people you talk with are bullish. And then at the bottoms, the vast majority of investors are bearish. Everybody is scared and frightened, and it looks like Armageddon is at hand. This turns the sentiment indicators positive. But it is only through experience that you can get the intestinal fortitude that enables you to sell when everybody else is buying and to buy when everybody else is selling. ...

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