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Are We Close to Peak Pessimism in the Stock Market?
Sep 12, 2019


  • "Be fearful when others are greedy and greedy when others are fearful." - Warren Buffett

You'll hear this often but how do you practice this?

How do you know when everyone is greedy or fearful?

Well, the media is one source. When you hear headlines predicting gloom and doom, pessimism is strong all around.

Google trends are an interesting source too.

The keyword 'Multibagger' tends to peak when there is euphoria all round. The same keyword drops when there is pessimism.

'Multibagger' search term peaked in India in Jan 2018. Mid and small caps were at multi-year highs. Since then, Mid and small caps corrected by 26% and 37% respectively.

Similarly, 'Multibagger' search was at its lowest in August 2013. Mid and small caps were at multi-year lows. Then from 1 Aug 2013 to 15 Jan 2018, mid and small caps were up by 233% and 282% respectively.

Currently, 'Multibagger' search is at its lowest levels. Like in 2013, retail investors are dumping stocks and looking for other safe assets.

Will history repeat itself?

Data source: https://trends.google.com

This Chart Of The Day was published in The 5 Minute WrapUp - Buy these 7 Stocks if You Believe in India

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