>On Wed, 5 Jun 2002, Doug Henwood wrote:
>
>> One problem with this is that too many people are saying the dollar is
>> about to fall. When that many people believe something, can it happen?
>
>You sound like you're moving from contrarian to contrarian fund investment
>advisor :o)
I'll take 1% of assets under management anyday!
>But seriously, I thought that was how stuff like this got started, that
>everyone thought everyone else was about to do it. Keynes' beauty contest
>in action. No?
The textbook sentiment topping cycle is euphoria at the peak, everyone thinking the sky's the limit ($100 oil! $5,000 gold! Dow 36,000!). Then a decline sets in, but it's taken as a buying opportunity, which it turns out not to be. Prices continue to fall - then, about the midpoint of the downdraft (what Prechter calls the "point of recognition") everyone says, oh wow, X is in a downtrend. It continues to fall, and then everyone thinks X is dead, never to rise again. That's the bottom. Crudely put, of course. For the $ to be getting this much negative press seems premature. Not that things always work according to the model.
Doug