"When things are going well and prices are high, investors rush...

"When things are going well and prices are high, investors rush to buy, forgetting all prudence. Then when there's chaos all around and assets are on the bargain counter, they lose all willingness to bear risk and rush to sell. And it will ever be so." Investors tend to be lazy and superficial in their investment decisions, embracing rosy scenarios when optimism reigns and end-of-the-world despond when markets sink. Classic manic-depression, in other words, and not the wisdom of crowds. These swings cause markets to move in a pendulum motion around fair value, rather than in the linear direction most observers assume. That means investors must be astute, both in determining fair value and judging the amplitude of each emotional wave. - Howard Marks