Just a spoonful of sugar...

Re-published from October 2009:

When checking my email several times each day, I look forward to the occasional message from my best friend. We are talkers – and touch base by phone at least once a week and send cards and letters, but rarely email. Last week, I had a message from Lesley, who happens to moonlight (when she is not fulfilling best-friend, mother and wife duties) as a stockbroker with a national brokerage. To my surprise, her email was not a kid-story, or a tip about a sale at our favorite shop – it was an article by one of her colleagues about the emotional cycles of the stock market.

Titled “Pessimism, Skepticism, Optimism, Euphoria”, the article describes market cycles as emotional swings that follow one another in a predictable pattern. In the interest of time and space (they only give me a couple hundred words…), I’ll summarize: pessimism brings
low prices and a bear marketplace; next comes skepticism, (like spring following winter, when weather can be great one day and bad the next) - economic data may still be negative, but predictions are cautiously optimistic; then comes optimism, the result of a period of good
economic data that creates confidence in consumers and spurs consistent, strong buying habits; and finally, euphoria – a period of extreme confidence and exuberance in a market, characterized by excessive risk-taking and speculative, frenzied buying. Once a market hits this
phase, it is bound to crash harder than a five-year-old on a sugar buzz from over-indulging on sweets at Nana’s house. Back to square one: pessimism. Sound familiar?

The good news is that we, as collectors and trade professionals, have all survived the crash, and it seems we are well on our way to equalizing the blood sugar levels of the market. Everyone sat up, dazed and confused, wondering if we dared to venture back to the candy jar. A few licks of a lollipop later, we have remembered that we can do this. A little moderation never hurt anyone (or any market). Our recent Labor Day auction, and many conducted by our colleagues, have demonstrated a healthy return to confident buying. Knowing where we are in the emotional cycle should be re-assuring as we march confidently on, working through a bit more skepticism into what we should hope to be a nice, long, leisurely stop at optimism.

Fondly, Amelia & Jeff Jeffers