Warren Buffett puts it well in the above quote; it’s one I use all the time. I think it aptly sums up this phenomenon, as well as the contrarian response that is required as a result. When others fail to worry about risk and fail to apply caution, as Buffett says, we must turn more cautious. But it must also be said that when other investors are panicked and depressed and can’t imagine conditions under which risk would be worth taking, we should turn aggressive.
