…when the degree of optimism in the market is essentially constant, prices tend to remain stable. When investors are converting their opinions from optimistic to pessimistic, prices fall because that’s the only way to maintain a balance between buying and selling as people lower their expectations. Similarly, markets rise when investors are converting from pessimism to optimism—not after they’re already fully optimistic. Thus, pessimism can be viewed as the fuel of a bull market—fuel that gradually gets used up as a market approaches its peak. Higher levels of pessimism simply translate into higher levels of fuel.