Permanent “bullish” or “bearish” positions are simply not useful

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Permanent “bullish” or “bearish” positions are simply not useful.

From a markets perspective, rarely is the eternal pessimist – i.e the investor currently thinking the world is going to hell in a hand basket – correct.

In investment, you must be able to swing from happy to sad. Doing so is essential if you are to be in phase with the market – and be right about your investment bias – more than 50 per cent of the time.

This can be tricky. You should be feeling bearish at the top of the market when everything looks great. Conversely, you have to be happy and optimistic just after a train collision of market and economic factors.

I should be glad I’m starting to feel bullish. Encouragingly, the market is rallying. Although a correction does seems likely as the Dow arrives back at pre-2011 summer slump levels, it still feels like the start of a very good 2012.

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