Market Psychology & Value Investors – “Sell Everything”???

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Market Psychology & Value Investors – “Sell Everything”???
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Market Psychology & Value Investors – “Sell Everything”??? by Todd Sullivan

Calls like this are never right….

“Davidson” submits:

After A Tough Year, Odey Asset Management Finishes 2021 On A High

For much of the past decade, Crispin Odey has been waiting for inflation to rear its ugly head. The fund manager has been positioned to take advantage of rising prices in his flagship hedge fund, the Odey European Fund, and has been trying to warn his investors about the risks of inflation through his annual Read More

Value Investors assess market psychology daily. It is in the disparity between fundamentals and market psychology that Value Investors see opportunity. Market psychology is reflected in daily pricing.

Rule 1: If the consensus is pessimistic as it continues to be today, then markets can only move higher.

Rule 2: Markets never top out till the consensus is optimistic.

Rule 3: Value Investors constantly double check that fundamentals disagree with consensus market psychology. Opportunity and the ‘margin of safety’ are strongest when fundamentals disagree the most with market psychology.

Consensus market psychology is always wrong. Even though Value Investors know this, they prefer to track fundamentals just to satisfy their naturally conservative nature. Gundlach’s ‘Sell Everything’ follows Soros’ and Icahn’s calls made a few months ago for a market top. The disagreement between fundamentals and market psychology is quite strong today.

Markets can only move higher from current levels as economic reports continue to support the Value Investor position.

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Todd Sullivan is a Massachusetts-based value investor and a General Partner in Rand Strategic Partners. He looks for investments he believes are selling for a discount to their intrinsic value given their current situation and future prospects. He holds them until that value is realized or the fundamentals change in a way that no longer support his thesis. His blog features his various ideas and commentary and he updates readers on their progress in a timely fashion. His commentary has been seen in the online versions of the Wall St. Journal, New York Times, CNN Money, Business Week, Crain’s NY, Kiplingers and other publications. He has also appeared on Fox Business News & Fox News and is a RealMoney.com contributor. His commentary on Starbucks during 2008 was recently quoted by its Founder Howard Schultz in his recent book “Onward”. In 2011 he was asked to present an investment idea at Bill Ackman’s “Harbor Investment Conference”.
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