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Saturday, 05 October 2019 11:29

How to profit from market pessimism

How to profit from market pessimism

"The most common cause of low prices is pessimism – sometimes pervasive, sometimes specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism what is the enemy of the rational buyer." - Warren Buffet

The political situation in the UK has driven an unprecedented level of uncertainty and pessimism. The knock off effect has been a widespread mentality to wait and see what is happening before they make any serious financial decisions. Yet, this is not unusual for the market. People tend to avoid investment when markets are unstable and buy when there is a feeling of optimism. If someone hears someone else is investing this creates a broad sense of euphoria where other investors jump on the bandwagon.