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Buzz & Banter

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Tony's observation that what people say sometimes does not coincide with what they do is important. After all, if there weren't a stark difference between what people say versus what they do, would pornography really be a multi-billion dollar business? I don't know the answer to that question, of course, it's just what I've heard.

As well, Jason's point about sentiment and whether one must now "be contrarian about being contrarian?" was right on the money and his distinction between sentiment indicators that measure what people say they do with their money as opposed to what they actually do with their money was an important one.

The suggestion that sentiment measures are a victim of their own popularity is one that appears regularly near both market lows and market highs. But, as Jason alluded, these arguments are circular at best. It reminds me of that scene from the movie The Princess Bride:

WESLEY: All right: where is the poison? The battle of wits has begun. It ends when you decide and we both drink, and find out who is right and who is dead.

VIZZINI: But it's so simple. All I have to do is divine from what I know of you. Are you the sort of man who would put the poison into his own goblet, or his enemy's? Now, a clever man would put the poison into his own goblet, because he would know that only a great fool would reach for what he was given. I'm not a great fool, so I can clearly not choose the wine in front of you. But you must have known I was not a great fool; you would have counted on it, so I can clearly not choose the wine in front of me.

WESLEY: You've made your decision then?

VIZZINI: Not remotely...you've beaten my giant, which means you're exceptionally strong. So, you could have put the poison in your own goblet, trusting on your strength to save you. So I can clearly not choose the wine in front of you. But, you've also bested my Spaniard which means you must have studied. And in studying, you must have learned that man is mortal so you would have put the poison as far from yourself as possible, so I can clearly not choose the wine in front of me.

I would also like to point out that in May the NYSE Bullish Percent was only in the 60% area. Today it is over 76%; remember, 70% and above is considered extreme. I would also note that extreme readings in the bullish percent index do not always correspond to extreme readings in sentiment measures, as one might expect, and as they do now. Just some food for thought.

No positions in stocks mentioned.

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