America has not bottomed out yet — ask Stanford

In stock market investing, you’re supposed to be pessimistic when everyone else is optimistic, and optimistic when everyone else is pessimistic. Warren Buffett famously put it this way: “Be fearful when others are greedy, and greedy when others are fearful.”

The reason the aforecited principle applies well in stock market investing is that the herd instinct makes people buy or sell stocks because other people are buying or selling. The result is that the stocks get over-sold or over-bought, thereby driving their price too low or too high in relation to their real indicators of value – mainly their current and future profits.

Eventually, the herd drives the stock so high or so low that even dedicated herders cannot fail to miss the fact that the stock is mispriced in relation to objective value indicators. At that point, they finally change direction – they start buying while the herd is still selling, or vice versa – and the price trend reverses. The herd reverses direction, and stampedes off the other way. You can make money by being contrary to the herd. Be a bull when they’re a bear, and vice versa.

So, does the same principle apply in evaluating the state of a culture? Has the assessment of American culture become so bearish that it is surely too much so?

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