Investor Psychology: Where We Are on the Rollercoaster

We posted this image up on the blog a long, long while ago, but thought it would be quite relevant to post it up again. Without further ado, the rollercoaster that is Investor Psychology:
(Click to enlarge)

Note that we aren't making a prediction as to where exactly we are in this cycle, since this graphic has limitations in terms of illustrating specific market circumstances. But, we've seen people argue that we are on the 'ascending' portion of this chart before. Only time will tell.

Comments

[wildfirexx:]

A good psychological graph with a sense of humor on how investors react to the good and bad news in the markets of our time. This mini- bull market is beginning to look a lot like the calm before the perfect storm relevant to the second wave before the final crash in the 30's.

Apr 17 05:30 AM

[TheFounder:]

This article is strongly hinting that we are in the recovery stage and investors will again jump in too late too high.

I don't subscribe to this point of view.

We have not yet seen the required things to mark a bottom.

1. True unconditioned capitulation (as opposed to a pretend capitulation which we have seen).

2. Lost of interest in stocks by the broad public. A sense that stocks are dead for long. The darkest moment of the night.

This rally is too strong to be real in any event.

Best of luck to all.

Apr 17 06:18 AM

[BigJake:]

This market rally has reinforced my notion that I clearly do not know what the hell I am doing.

Apr 17 11:36 AM

[Ned S:]

A smart man said to me once You shouldn't invest in something you don't understand.

Apr 18 01:47 AM

[Outcast Trader:]

You are close on your image. The rally is the first leg up. On the SP500 daily chart you will see the the left shoulder and nearly all of the head of a 'Head and Shoulders' pattern are formed. Yes, there will be another strong downward move, but the low of the year is in and the pullback will most likely not go much below 800 if at all. And ... when this happens ... buy buy buy

Apr 18 11:04 AM