It pointed out that the bull market began to peak when everyone was optimistic about both the stock market and the futures market. When everyone is bearish, the bear market has bottomed out. As long as you don't agree with the masses, there is always a chance to get rich. On the contrary, this theory is not only optimistic for most people, but also pessimistic for us, or optimistic when the public is pessimistic.
On the contrary, the theory will consider these trends of optimism and bearish ratio, which is a dynamic concept. Contrary theory does not mean that the public must be wrong. The public is usually right about the main trends. Most people are optimistic that the market will rise, because these optimism has turned into real purchasing power. This phenomenon is likely to last for a long time. Until everyone's optimism tends to be consistent, the market situation will change qualitatively-the imbalance between supply and demand. Perry said: When everyone has the same idea, everyone is wrong. On the contrary, from the actual market research, it is found that only 5% people make big money and 95% people are losers. If you want to be a winner, you can only run counter to the ideological line of the masses and never go with the flow.
The argument of the opposite theory is that just before the market turns from a bull market to a bear market, everyone will think that prices will rise again and again, endlessly. Everyone has this knowledge, and everyone will try to buy it. The upward trend consumes the purchasing power of buyers until all those who want to buy have bought it, and then the funds are unsustainable. Bull market will end in everyone's optimism. On the contrary, when the bear market turned into a bull market, the market was bleak, and all the bears wanted to sell their goods until they were all sold out. No more bears took action in the market, and when everyone was sold out, the market bottomed out.
Before the bull market was the craziest, but it was about to die out, newspapers, television, magazines and other mass media were all reflecting the opinions of the general public and trying their best to publicize the optimism of the market. When everyone's enthusiasm is high, it is a precursor to the market crash. On the contrary, the mass media are too lazy to report market news, and no one pays attention to the market. When all the newspaper news is bad news, it is the moment before the dawn of the market, and when it is darkest, the dawn is ahead. Mass media always follow the mass line, so it just goes against the opposite theoretical principle. Instead, it is made into information for the opposite theory. If the mass media is optimistic, it is necessary to be bearish, but it is the right time to enter the market.
What has been said above only reflects the spirit of the opposite theory.
But how can we know whether everyone is optimistic or bearish?
Intuition or imagination alone is not enough. When using the opposite theory, there are usually two real data, one is the friend index; The other is called the market sentiment indicator. These two indicators are data collected by the futures or stock departments of some large securities firms and professional investment institutions. The source of information is the address book of major brokers, funds, professional investment, and even the comments of newspapers and magazines, and the ratio of optimism and bearish sentiment is calculated. Take the friends index as an example. The index starts from zero, which means everyone is absolutely bearish. Until 100%, everyone is optimistic, including reports from funds, big brokers, investment institutions, newspapers and magazines. If the friend index is around 50%, it shows that optimism and pessimism are mixed. The index usually fluctuates between 30 and 80. If you are optimistic and bearish at the same time, it means that the bull market or bear market has ended and is about to turn the corner. Because the friend index ranges from 0 to 100, there are different inspirations, and a detailed analysis will give investors a clearer concept.