We don’t want to leave the impression that only pessimism can be taken to extremes. Before the tech stock bubble of the late 1990s, there was a tech stock bubble in the 1960s, a “nifty-fifty” stock bubble in the 1970s, a gold bubble around 1980, a housing bubble just a few years ago, and so on. Of course, none of these bubbles seemed so extreme at the time to most people. There’s an important message for investors in this history: Investments that feel safest at the moment are frequently the most dangerous, and those that seem the most uncertain often become the most rewarding. “Buy low and sell high” essentially means buying irrationally unpopular investments and selling unduly popular ones. Because crowd psychology often exaggerates investment price swings, the crowd is frequently wrong. Yet crowd behavior feeds on itself over the short term, thereby increasing the sharpness of the inevitable correction. Right now we sense that the crowd is overly cautious, and believe it or not, we expect crowd psychology to reverse and become over-exuberant at some point. After all, it’s happened dozens of times before.