Key insights
- The author argues that market bottoms occur when fear peaks, not when clarity emerges. Retail investors often wait for positive news before buying, missing the opportunity as the market is forward-looking. Bottoms form when expectations are crushed and positioning is washed out, even amidst negative headlines like layoffs and earnings cuts. Waiting for clarity guarantees paying higher prices later, as markets move up before the news flow improves.
I see most retail investors completely missing this because they’re wired backwards, they wait for things to “feel better” before buying. But the market is a forward-looking machine, not a reflection of today’s headlines. By the time the news flow improves, oil drops back down to $80-90’s, and the war narrative turns positive, prices have already moved up, often significantly. Look at every major bottom (think Covid or past recessions): things were still getting worse, layoffs were still happening, earnings were still being cut, and sentiment was awful. That’s exactly why the bottom forms, because expectations are already crushed and positioning is washed out. The market doesn’t need good news, it just needs things to stop getting worse. If you’re waiting for clarity, you’re not being disciplined, you’re just guaranteeing you’ll pay higher prices later. This may help explain why markets moved up while oil is still volatile and the war is still ongoing.