Trend Reversals and Underlying Value Buy from Dumb Sellers not Smart Sellers

Avoid Conventional Wisdom

We often return to stocks that face a cyclical business downturn, but investors are overreacting to the prospect of a temporary dip in earnings. When the Fed is raising rates, for example, investor reaction is usually negative out of all proportion to economic reality. We bought banks, thrifts and mortgage companies in 1990, 1994 and 1999 as investors followed conventional wisdom and sold them.
Tags: value, investing