Almost Always Darkest At Dawn

A money manager I follow (consider him my mentor) wrote an article titled "It Is Almost Always Darkest At Dawn" and his basic premise was that based on his experiences in managing money in the market, when investor emotions get extreme, whether jubilant or devastated, there is usually a turn in the direction of the market.  When stocks act as badly as they have been over the past 6 weeks, everyone on tv and everything you read is negative and chicken little's screaming the sky is falling...for example, on CNBC.com here is a list of some of the stories/articles that have been written and posted to the website:

1. Scott Walker Refused to Hide From Fiscal Reality
2. Deep Holes and Weak Leaders, a Bad Combo
3. Obama Runs Very Fast From His Failed Economy
4. Will Soaring Debt Trigger a Downturn?
5. Japan's Untenable Deficit-Financing Model
6. Europe Needs Its 'Lehman Moment'
7. Why The Eurozone Could Unravel Shockingly Fast
8. G7 Must Look Beyond China for Eurozone Rescue
9. Chinese Corruption Is Still Alive, Wild and Divisive
10. Think the Market's Crazy Now? Just Wait
11. U.S. Economy Not at Escape Velocity
12. Don't Drink the Farcical 'Fantasy Jobs' Punch
13. War: America's New Economic Stimulus Policy
14. What Graduating Harvard MBAs Are Up Against
15. With Europe Listing, a Correction Is Near
16. Would Greece's Exit Wreck the Euro?
17. The Class of 2012 Faces a Tough Labor Market
18. As the Economy Sinks, a Do-Nothing President
19. The Real King of Bonds Says It's Time to Buy
20. Taxation Goes Frighteningly Global
21. Obama Pursues the Failed Policies of the Past
22. The Lowlights of Obama's Economics
23. Job Insecurity at Goldman: Where's the News?
24. 5 Charts That Show Deflation Is a Growing Threat
25. Ultra Wealthy Are Shunning Stocks
26. Krugman Unmugged By a Failed Economic Reality
27. This Is Your Market on Deflation
28. The Markets' Awful Behavior Is Run of the Mill
29. Europe-Driven Market Risk Remains Elevated
30. Factory Orders Fall Again in April

When you look on the market website and all you see is articles that look like this it makes you want to go get back in bed or day dream about anything other than stocks or investing.  If you look back at investor sentiment, and they actually track such, then when sentiment behavior gets overly negative, we usually see a big "snap-back" rally (think about what would happen if everyone on a boat ran to one side - the boat would list/tip to one side - and then if everybody jumped off it would quickly roll back the other way).  This is how investor emotion and sentiment affect stocks.  Like I wrote the other day, usually the best time to buy stocks is when no one else is or when "emotionally" it's hard to. 

My point in all of this is that we are seeing a massive snap-back rally today and I continue to believe that we will see stocks rise over the coming months, ESPECIALLY if Europe can somewhat tidy up their mess.  Good hump day so far...