Contrarians Trampled by Herd

Poll: 60% say depression 'likely'

And Banerji said that the increasingly grim view of the economy will by itself lead to cutbacks in spending by both consumers and businesses. That in turn will result in greater job losses and more economic pain.

"The fact that the majority of people believe we are going into a depression ensures that the recession will get worse," Banerji said.

The public herd continues to trample the contrarians.

December 2, 2007
Contrarians Make a Case for Gains in the Recent Turmoil

DON’T be too upset by the stock market’s recent decline. It may have been painful, but it’s probably just a stumble by a bull market that still has room to run.

That, at least, is the message that comes from contrarian analysis of investor sentiment — an approach to market timing that relies on the propensity of the average investor to get the market’s near-term direction dead wrong most of the time.

The DJIA closed at 13,371.72 on Friday, November 30, 2007. It is now 9,258.10. That's a 30% loss.