Investors are seized by optimism. Can the bull market last?

BULL markets, according to John Templeton, “are born on pessimism, grow on scepticism, mature on optimism and die of euphoria”.

The legendary Wall Street fund manager put this philosophy into practice in 1939. At a time when others were panicking about Europe’s descent into war, Templeton borrowed money to buy 100 of every share trading below US$1 on the New York Stock Exchange. Within a few years he had booked a 400 per cent profit and forged a template for future investors.

Even in the 21st century, Templeton’s favoured moments of “maximum pessimism” present the very best buying opportunities. In March 2009, investors despaired over the future of capitalism; in March 2020, over a pandemic and shuttered businesses. Both times, the correct response was to close your eyes and buy stocks.