Marcus Padley: Exploit the Fear

"At times in the market, like now, sentiment takes over from fact and share prices stray even further from the confines of logic and predictability and it manifests itself in volatility and confusion which is frustrating for the ordered mind. But what you can do with sentiment is to understand that it moves, much like a share price, in a trading range that stretches between irrational exuberance and blind fear. At the moment we are experiencing fear. It is hardly extreme but it is sabotaging our ability to think clearly with the potential to lead us into blind panic. After a few market corrections, rash decisions and some trading losses, those of us who have been around a little bit longer start to learn that we can override our genetic conditioning and rather than “fall in” with everybody else’s stock-market dread and anxiety can begin to recognise when we are approaching the top and bottom of the sentiment trading range and rather than lose our ability to think clearly set about trying to exploit everybody else’s inability to think clearly."