Recency bias drives expectations. When times are good, everyone expects the good times to continue… And when times are bad, folks expect more trouble.
That’s why contrarian investing works. When expectations hit massive lows, there’s no one left to drive prices down further. So instead of getting “more of the same,” you get a major reversal.
That’s where we are right now, based on one indicator. This measure tells us that nearly half of investors expect stock prices to fall. That’s one of the highest readings on record.
As contrarians, this should get our attention. Sure enough, history shows this is a good buying opportunity that could lead to double-digit gains…
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