Obama Defies Pessimists as Rising Economy Converges With Stocks

BIG E said

It's funny a lot of average people do the opposite of what they should do in the stock market. After it tanks, they bail out and after it rises they get back in. I have sold all my positions recently because I'm waiting for a pull back. I would rather miss a rise than ride it to the bottom.

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That's what creates the over-reaction in the market. Most people pull money out when they see it going down, causing it to go down well below fair value. Smart people pour money in (timing here is key, I could have made twice as much money in the last year if my timing had been better :idunno:) when they see value. Conversely, when the market is riding high everyone starts chasing it. You may do well with this for a while, but if your timing isn't good you will get burned. I feel the majority of stocks right now are properly valued or over-valued. If I am right, the corrections will hit, you'll have over-reaction again from the masses and plenty of "value buys" once again.