As crisis-hunting alligator investors lying in ambush along the world’s financial river, we like to see asset prices falling at terminal velocity. When an asset plummets in value or suffers a bear market, it immediately goes on our watch list. As I often state, markets are rational most of the time. They price most assets correctly most of the time. But when emotion levels go off the charts – like they do in a crash or a bear market – emotion overwhelms reason.During a crash, terrified investors sell assets with no regard for their underlying values or ability to produce cash flow. During a crash, the price of assets becomes “decoupled” from the value of assets. If you can keep a level head while others are losing theirs, you can buy at fire-sale prices.
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