rashes trustnet . com damage “ as the good were washed down with the bad ”. Burns says another good indicator is when everyone gives up and the mainstream sentiment appears to be : “ Why on earth would you put money in the stock market ?” “ You ’ d probably say the polar opposite of what we ’ ve seen these last 12 months ,” he adds . “ A market turn is usually at the point of maximum pessimism . The realignment is often painful , particularly for those who have used leverage and those late to the party .” He says this is best summed up by Warren Buffett ’ s quote : “ Be fearful when others are greedy . Be greedy when others are fearful .”
Sowing the seeds “ The hardest thing to do is to deploy capital when prices are falling everywhere ,” Burns adds . “ Every emotion is telling you not to . It is at this point the seeds are sown for the multi-baggers of the next cycle .” As an example , Hornby recalls a conversation in 2009 with a potential client who had just sold his business for £ 10m , which he wanted to invest : “ He came into my office and said , ‘ do
12 %
– fall in S & P 500 on 16 March 2020
anything you like with it , but don ’ t put it in the equity market ’. And of course , that was exactly what he should have done , but that ’ s how it feels at the bottom of a bear market .” Yet while Hornby was able to speak from a position of knowledge by that point , this was only because he had learnt the hard way . “ I can remember 2003 after the dotcom bubble when I was running an equity broking desk ,” he continues . “ It was awful , I didn ’ t feel any of the team would have a job and I considered becoming a bond specialist , because everybody wanted to buy bonds . “ And of course , that was the wrong thing to do .”
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