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people who've heard me before know that I think a lot about sentiment I don't always get it right but I think about it a lot and I try to figure it out as best I can and after a rise like we've had in the stock market investors sent them at uh and how it may have changed is important the fact of the matter is if we just go back to this concept that I've articulated for decades from Sir Don Templeton his classic line that bull markets are born on pessimism grow on skepticism mature and optimism and die on euphoria you say to yourself where kind of are we in that spectrum and how might you think about that well you don't have to be a genius to know that as this bull market began last fall September October we had pessimism all kind of predictions of recession with inflation with with with with and problems Ukraine and problems and politics and what if the election in the fall didn't come out the way you wanted it to because everybody thinks that the election doesn't come out the way they want it to it's just going to be terrible but we've had a lot of history of a lot of elections coming out all kinds of ways and we know that that isn't really as big a thing as people think it is and that particular election midterm election we know typically is positive for stock markets regardless how it comes out but all that aside what I said last year is that that bear Market led into a period where people were anticipating recession longer than any recession which to date we haven't gotten in measured history and as we haven't had a recession and had a stock market Rising we've had a lot of people sort of digging in their heels and I don't believe this I don't believe that I don't believe the other and yeah that may be true but and this is all this thing that I've written about it some length again for decades that's a phrase I coined called a pessimism of disbelief which parallels the wall of worry that bull markets legendarily climb that parallels the John Templeton phrase born on pessimism girl on skepticism etc etc where we Linger on past the absolute pessimism in the skepticism phase with the yeah buts and we fight the rise and we're in that period now we're past a sheer pessimism we're past a sheer Terror we're past a point where everyone thinks Putin might run over Ukraine next week we're past the point where people are ultimately dead afraid of Fed rate hikes or other rate hikes we've had a lot of them in the Market's higher than it was before they started and so therefore it can't be as bad as people feared even though maybe it's bad it can't be that bad and then there's the part about inflation that's been cooling down and we can debate about that but but but but and all the yeah buts fit into that pessimism disbelief that the bull market likes to rip through as it climbs the wall of worry that's built in Brick after brick after brick of negative things if we look at this year at the very beginning of the year 2023 we had oh my gosh the Republicans may have won the house and that may give you gridlock but Kevin McCarthy won't be able to come speaker the problems can't figure out how to get a speaker this is going to be chaos then after that you get a fear a few more rate hikes then after that you get to the banking crisis remember that banking crisis thing uh just kind of cute because right about now you're seeing second quarter earnings coming out for small and Regional banks that we're all supposed to be so in danger and they're coming out nicely better than expectations so much for the crisis this is what I would call A c-r-y-s-i-s and fits into the pessimist of disbelief and then right after that we got that whole period you remember where people were saying oh my gosh Congress that same Congress they didn't think could get a speaker of the house can't put together uh budget pass so that we won't have the government defaulting on its debt and then we'll have it defaulting on the debt on a crisis that goes with that and there's another cr-y-s-i-s because we've seen this movie many times before and We Know How It Ends and the only thing they do is change the actors and a couple little jokes in the script and it ended perfectly the way it always does all brick after brick after Brick in the Wall of worry and all in all it's just another brick in the wall a lot Pink Floyd pretty normal but people can't get over it and that sentiment remains in this skepticism of not the pessimism not yet to optimism we got a good ways to go before we get to optimism but we still have people trying to look for the recession I think it really is a recession even though it hadn't been declared a recession even though it doesn't qualify as a normal I think I think I think I think yeah but yeah but so the reality is sentiment is consistent with continued bull market we're not in pessimism anymore but we're not anywhere close to optimism we got a ways to run in the long term the market is about economics and reality and as Ben Graham famously said in the short term the Market's a voting machine in the long term it's a weighing machine that long term is weighing those real things in the short term it's a voting machine which is more like an election and is really about who do you like what are you afraid of it's more about your emotions and sentiment and that sentiment part is important to focus on it right now is in a category regardless of which subsets of it you look at in the marketplace newsletters pension plans retail investors money managers it's in the skepticism phase and with that you should remember Warren Buffett's famous line that you should be fearful when others are greedy and greedy when others are fearful and right now people are not overly greedy so you should be
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